Bank Nifty

The Nifty Bank Index was launched in the year 2000. The Index has climbed from 5195 at the start of January 2009 to over 48,000 by the end of 2023.

Nifty Bank comprises the banking stocks listed on the NSE. These stocks may include both public-sector and private-sector banks. At present, the index has 12 companies, including banking giants like HDFC Bank and ICICI Bank. It also has smaller banks like AU Small Finance Bank and Federal Bank. You can check all the companies that are part of the Nifty Bank index in the below image.

Nifty Bank works by providing investors and traders with a benchmark to assess the performance of the banking sector. It is calculated based on the stock prices of select banking companies listed on the NSE.  If the underlying stocks of the index move up, the index rises and vice-versa. The market sentiment related to the banking industry is reflected in the rise or fall of the Bank Nifty index.

To buy the Nifty Bank index, you may need a Demat and a trading account (ETF buying). You will find exchange-traded funds or ETFs that are listed on the stock exchanges. You can find them on ICICIDirect and make an investment.

Alternatively, you can index in the Nifty Bank index via mutual funds. You can find the index on the ICICIDirect.

The performance of the Bank Nifty index depends on various factors such as interest rates, economic indicators, government policies, and global market trends that affect the companies from the banking sector that are included in the Index

The trading cycle for Bank Nifty futures contracts follow a 3-month cycle - the near month, the next month and the month after that. And a new contract is introduced on the trading day that follows the expiry of the near month contract. One can, however, hold Bank Nifty ETFs indefinitely.

Yes, one can buy Bank Nifty Contract today and sell it tomorrow

The Bank Nifty index is calculated using a free-float market capitalization-weighted methodology. This means that the index value is based on the market capitalization of its constituent stocks, adjusted for the available free float (available shares for trading). The calculation involves multiplying the free-float market capitalization of each bank by its weightage in the index, derived from its proportion in the total market capitalization of all Bank Nifty stocks. 

The sum of these individual values is then divided by the index's base value. The resulting figure represents the Bank Nifty index value. As stock prices and market capitalizations change, the index is recalculated periodically to reflect the latest market conditions and the relative importance of individual banks in the index.

To trade in Bank Nifty, investors can use various financial instruments such as futures, options or exchange-traded funds (ETFs). In order to trade in Bank Nifty via these instruments, one needs a demat and a trading account. With ICICI Direct, traders can take positions based on their market outlook and trading strategies to trade in Bank Nifty.

Bank Nifty includes stocks of 12 major banking companies listed on the NSE. These 12 banks have a high market capitalisation and are the most active banking stocks on the NSE.

The Bank Nifty contracts expire weekly on every Thursday and they expire monthly on the last Thursday of each month.