What is Bank Nifty and How does it Works?

What is Bank Nifty & How it works_ (3)

Bank Nifty:

Bank Nifty represents the 12 most liquid and large capitalized stocks from the banking sector which trade on the National Stock Exchange (NSE). It provides investors and market intermediaries a benchmark that captures the capital market performance of the Indian banking sector.

An index comprising 12 state-owned and private sector banks. Like the Nifty, those bullish on banks can buy BankNifty futures comprising 30 shares, or buy a call option on BankNifty. Bears can similarly short or sell Bank Nifty futures or buy a put option on the index.

Bank Nifty is an index that is the most popular in India. In which there is a lot of volume and volatility, which the traders take advantage of volatility. Banknifty is the only index in the Indian stock market. In which the Weekly option is started,  monthly options contracts expire on the last Thursday of the expiry month and weekly options contracts expire on every Thursday of the week. If the last Thursday is a trading holiday, the contracts expire on the previous trading day.

How does Bank Nifty Work?


bank nifty

Banknifty consists of stocks of private and public banks linked to the banking sector. Based on whose value, Banknifty makes a movement. If there is any positive news on the banking sector, then it also has a good impact on the Banknifty. Banknifty futures operate based on the spot price.

Most valuable factors are associated with Bank Nifty:

  1. The BankNifty index includes 12 banking sector stocks. In which there can be both private and public banks and all these stocks should be mentioned in the NSE.
  2. Banknifty is introducing on 15th September 2003 with a start date of 1st January 2000 and a base value of 1000.
  3. This index is indexed and the stock included on it is annually balanced. That is, how much value a stock must be maintained in the BankNifty Index. For this, the cut-off deadline is set on January 31st and July 31st every year, if any shift happens on these dates, then the news is provided to the market four weeks in advance.
  4. It is essential to be in the segment Future Options to enter a stock in Banknifty.
  5. Stock includes the Bank nifty Index from the banking sector.
  6. The weekly choice is only in Bank nifty, which expires every Thursday.
  7. Banknifty is the stock market’s most searched.
  8. The BankNifty index used as a benchmark for a mutual fund.

Weightage of Banks in Bank Nifty:

Banks Weightage(%)
HDFC Bank Ltd 35.77%
ICICI Bank Ltd 16.58%
Kotak Mahindra Bank 12.96%
State Bank of India 8.6%
IndusInd Bank Ltd 8.49%
Axis Bank Ltd 7.53%
Yes Bank Ltd 5.2%
Federal Bank Ltd 1.63%
Bank of Baroda 1.25%
Punjab National Bank 0.92%

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