Bank Nifty(NSE) is an index which comprises of 12 stocks (that trade on NSE) from the banking industry which are the most liquid and largely capitalized. Bank Nifty stocks belong to the public as well as private sector. It was launched in the year 2003. Bank Nifty investing methodology is a smart choice. This is because this weighted index offers a benchmark (for investors as well as market intermediaries) that gives a solid view of the banking sector’s capital market performance. Sometimes it is also referred to as
The Bank Nifty Index can be referred for multiple purposes. For instance, benchmarking of fund portfolios, introduction of new ETFs, index funds and other structured products.
Though introduced in 2003, Bank Nifty Index uses Jan 2000 as the base year. The Bank Nifty share prices and values are displayed on a real-time basis during the NSE trading hours.
The top 10 stocks comprising the Bank Nifty Index currently are::
HDFC Bank Ltd.
ICICI Bank Ltd.
Axis Bank Ltd.
Kotak Mahindra Bank Ltd.
State Bank of India
IndusInd Bank Ltd
AU Small Finance Bank Ltd.
Bandhan Bank Ltd.
Federal Bank Ltd.
IDFC First Bank Ltd.
All the Bank Nifty stocks are assigned a weightage. The Bank Nifty weightage of the stocks is computed basis the free-float market capitalization methodology. The maximum weightage of a single stock does not exceed 34% and the cumulative weightage of the top three stocks does not cross 63% in the Bank Nifty weightage.
The Bank Nifty Chart can be used to understand the price movement and any changes in trends in the Bank Nifty Index. The data is available for multiple time frame such as daily, weekly, monthly, 3-months, etc. The weekly and monthly Bank Nifty charts are most commonly used to take entry decisions or profit booking.
What is Bank Nifty Option Chain?
An option chain lists all the option (put and call) strike prices along with the premium for a specific maturity period. You can check the Bank Nifty Option chain along with the Bank Nifty spot prices on the TradeSmart portal.
What is Bank Nifty lot size (F&O)?
In the world of trading, lot size refers to the number of stocks (or any other instrument) that you can purchase in a single transaction. It is also referred to as “size of the trade”. This concept helps to bring in standardization. The bank nifty lot size currently stands at 20. It was changed from 40 to 20 in October 2018.
“Technical analysis” plays a crucial role in investing. It helps in identifying patterns, analyzing trends and examining the strength and persistence of the trends. You cannot rely only on the Bank Nifty news (which is available to everyone). You need to see through and read between the lines, something which Bank Nifty Technical Analysis will help you to do. A good trading platform, such as the one provided by TradeSmart has in-built advanced technical analysis tools to fine-tune your investing decisions.
The movement of Bank Nifty Index can be analyzed from two parameters – fundamental and technical.
Fundamental factors include bond yield movement, quarterly results of the top six participants in the Bank Nifty Index, etc. Technical factors include Index’s high call and put option, weekly and monthly option activity, COC (Cost-of-carry) movement, VWAP (Volume weighted average price) level, Elliott Wave (only for positional trend), historical volatility movement, Index Ratio trend, etc.
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Yes. While both are NSE indices, they vary in their composition as well as scope. Nifty reflects the health of the overall economy as it consists of 50 well-established and financially robust companies, spread over 17 sectors. Bank Nifty is a sectoral index. It consists of 12 banking sector stocks which are highly liquid and largely capitalized.
Yes. You can invest in Bank Nifty through Bank Nifty ETFs (which are based on Bank Nifty stocks)
It is re-balanced twice in a year.
Future contracts are derivatives which derive their value from that of an underlying instrument or asset. In the case of Bank Nifty Future contracts, the underlying asset is the Bank Nifty Index (whose value in turn is dependent on the performance of the 12 chosen banking sector stocks)
Till 2019, the index had generated more than 20% CAGR since its inception in the year 2000.