Everyone Is Stock Market Has At Least Listened Once About The Word Bank Nifty. Most Traders Use Bank Nifty For Trading. In This Article, You Are Going To Learn About What Is Bank Nifty And The Complete Details Of Bank Nifty.
Bank Nifty Is Very Famous For Traders Due The Volatility. Bank Nifty Usually Moves More Than Nifty, So To Capture The Movement To Gain Big Profits Most Of The Traders Will Trade In Bank Nifty.
Most Of the Beginners Who Trade In Bank Nifty, They Just Simple Checks The Chart Of Bank Nifty And Put Stop Loss And Target Just By Analyzing The Chart Of Bank Nifty.
Bank Nifty Is Not A Individual Stock Or Asset. So Now Let’s Learn About Complete Details Of Bank Nifty, After Reading This Article You Will Consider Various Other Factors As Well Before Taking A Trade-In Bank Nifty.
What Is Bank Nifty ?
Bank Nifty Is An Index Comprising Of 12 Banking Sector Stocks. If The Price Of These Stocks Increases The Bank Nifty Will Increase And If The Price Of These Stocks Falls Then The Bank Nifty Will Fall.
The 12 Stocks In Bank Nifty Are HDFC Bank, ICICI Bank, State Bank Of India, Kotak Mahindra Bank, Axis Bank, IndusInd Bank, AU Small Finance Bank, Bandhan Bank, Federal Bank, IDFC First Bank, Punjab National Bank, And RBL Bank.
But The Weightage Of These 12 Stocks Varies. Some Stocks Will Have Higher Weightage And Some Stocks Will Have Lower Weightage.
Bank Nifty Weightage
- HDFC Bank – 27.56%
- ICICI Bank – 22.91%
- Stata Bank Of India – 12.42%
- Kotak Mahindra Bank – 11.77%
- Axis Bank – 11.49%
- IndusInd Bank – 5.20%
- AU Small Finance Bank – 2.35%
- Bandhan Bank – 1.73%
- Federal Bank – 1.53%
- IDFC First Bank – 1.22%
- Punjab National Bank – 1.03%
- RBL Bank – 0.79%
HDFC Bank Has The Highest Weightage In Bank Nifty With 27.56%, Followed By ICICI Bank With 22.91%, State Bank Of India With 12.42%, Kotak Mahindra Bank With 11.77%, Axis Bank With 11.49%, IndusInd Bank With 5.20%, Au Small Finance Bank With 2.35% , Bandhan Bank With 1.73%, Federal Bank With 1.53%, IDFC First Bank With 1.22%, PNB With 1.03% And Finally with Least Weightage RBL Bank With 0.79% Weightage.
As HDFC Bank Has The Highest Weightage In Bank Nifty, If HDFC Bank Falls Then It Will Heavily Affect The Bank Nifty. Whereas RBL Bank Has The Lowest Weightage, So Even If It Falls Or Raises It Will Not Affect The Bank Nifty Much.
So If You Are Trading In Bank Nifty Analyze The Stocks With Highest Weightage. Because Even If The Bank Nifty Chart Is Looking Good, If There Is Any Bad News Or Uncertainty Regarding The Highest Weightage Stocks Like HDFC Bank, ICICI Bank And Other Banks It Will Have to Affect On Bank Nifty.
Bank Nifty Rebalancing
Above We Have Seen That Which Banking Stocks Are In Bank Nifty And Their Weightage.
But These Banking Stocks And Their Weightage Is Not Permanent. The Bank Nifty Is Re-Balanced Semi-Annually, Means Two Times A Year.
The Bank Nifty Is Re-Balanced On January 31 And July 31. For That Rebalancing Past Six Months Data Of The Banking Stocks Is Taken Into Consideration.
Why Only These Stocks In Bank Nifty ?
You Might Have A Doubt That Why Only These Twelve Stocks? Why Not Other Banking Stocks? What Is The Criteria To Be A Part Of Bank Nifty And What They Consider Before Adding A Stock To The Bank Nifty.
To Know these Things, Firstly You Need To Know About Free Float Market Capitalization.
Free Float Market Capitalization
Free Float Market Capitalization Means The Total No Of Stocks Which Are Available For Trading X Price Of Stock. The Stocks Which Are Held By Promoters Or Government Are Not Available For Trading. These Stocks Are Locked And The Stocks Bought By Life Insurance Companies Like LIC Are Also Not Available For Trading. There Will be A Lock-In Period For That Stocks.
Some Companies Who Owns The Shares Will Also Have A Lock-In Period, So These Shares Are Not Available For Trading.
Free Float Market Capitalization = Total No Of Shares Available For Trading X Current Price Of The Stock.
This Is The Main Thing Which Is Considered While Selecting A Banking Stock To Add To Bank Nifty Index.
Other Eligibility Criteria’s
Other Eligibility Criteria’s Are The Banking Stocks That Are Allowed To Trade In Futures And Options Are Only Will Be Eligible To Be A Part Of Bank Nifty.
The Companies Need To Be At Least 6 Months Old. Or If The Company is Listed Through IPO The Company Need To Be At Least 3 Months Old.
Final Selection Of 12 Banking Stocks Is Done based on The Free Float Market Capitalization.
All Banking Stocks May Fulfill All The Eligibility Criteria’s To Be A Part Of Bank Nifty, So Final 12 Stocks Are Selected based on Their Free Float Market Capitalization.
To Know Complete Details Of Eligibility Criteria Click Here And Read The 2nd Page.
Trading In Bank Nifty
The Mistake Done Most Of the Beginning Traders Is That They Trade In Bank Nifty Only By Looking At the chart Of Bank Nifty.
Do Remember That The Movement Of Bank Nifty Is Because Of The Movement The Banking Stocks, So Along With The Chart Of Bank Nifty, Analyze Or Add The Top 5 Stocks By Weightage To Your Watchlist.
Analyze The Charts And Present Situation Like Support Or Resistance Or Technicals Of The Top 4 Or 5 Stocks Of Bank Nifty. Because These Top 4, 5 Stocks Will Have The Biggest Impact On Bank Nifty. If These Stocks Are Positive Then The Bank Nifty Will Increase.
Most Of The People Thing That Bank Nifty Increased That’s Why Stocks Also Increasing Or Nifty Is Increased That’s Why Stocks Are Rallying. Remember One Thing Nifty Or Bank Nifty Will Increase Only Because Of The Rally In Stocks Or Increase In Stock Prices.
So Along With Bank Nifty Chart, You Need To Analyze The Top Four Or Five Stocks.