When it comes to the settlement of the bnk F & O contracts, the underlying asset has to be delivered or received by the related party by way of cash settlement. Bigger companies, such as HDFC bank, have a higher weightage, whereas smaller companies like PNB have a lower weightage. The base date is referred to as the first date from which that index has been tracked, whereas the base value means the value that is assigned to the index on that date. Assume you went long Bank Nifty futures at by paying a margin of 7% (Rs 35,160). If, on Monday, the Bank Nifty closes at 16500, the loss will be Rs 7,290 (243×30). At that level, what’s the contract value and the approximate margin one has to put up to trade?
NIFTY BANK INDEX (Banknifty)
Bank Nifty was created by NSE in September 2003 to have the free flow movement of the capital market performance of one of the critical service sectors of India, i.e., banking. As of 31st January 2023, the market capitalization of Nifty50 is Rs 14,041,150.99 Cr and that of Bank Nifty is 2,931,118.66 Cr. The Nifty50 also has better liquidity than the Bank Nifty making it suitable for the investors to trade the index.
It uses the NIFTY 50 to measure companies’ performance or portfolios using weighted average and market capitalization. Bombay Stock Exchange (BSE), on the other hand, uses Sensex to measure the total value of 30 stocks of large companies listed on the BSE. These indices consist of large, mid and small liquid stocks of companies listed on the NSE. They serve as a benchmark for measuring the performance of stocks or portfolios based on market capitalization.
Index as a benchmark:
Bank nifty is considered to be a good stock for earning more profit. The expiry date of all the derivatives is the last Thursday of every month, but if the last Thursday is a holiday, then the working day before last Thursday will be considered as the expiry day. The lot size may differ depending on the price and volume of the security being traded. A lot of derivative contracts standardize the contracts and help the trader know exactly the exact number of contracts being bought in a trade. The lot size is comprised of 25 contracts, which are grouped together.
Thematic indices is another calculation method used by the National Stock Exchange (NSE) to measure the performance of companies that represent a movement in a specific theme. As mentioned earlier Bank Nifty is a specialised index that measures the performance of only the banking sector of India. On the other hand, the Nifty50 represents 13 sectors including IT, banking, pharma, telecom, energy, etc. Those investors who are looking for diversifying their portfolio should invest in the Nifty50 index since it reduces the risk of investing in a single sector. Benchmark indices help investors understand how the overall equity market is performing. When there are more buyers of stocks, the reading in the NIFTY 50 chart goes up representing the cost of shares, and more sellers reduces the price and the reading goes down.
Which sectors are covered by Nifty?
NIFTY 50 follows the trends and patterns of blue-chip companies, i.e. the most liquid and largest Indian securities. It refers to the end of the validity of the derivative instrument with bnk as its underlying asset. The Bank Nifty future is based on volatility and open interest (OI).
- It is crucial for anyone who is wanting to invest in the Indian markets to understand this and get their concepts clear.
- They serve as a benchmark for measuring the performance of stocks or portfolios based on market capitalization.
- As mentioned earlier Bank Nifty is a specialised index that measures the performance of only the banking sector of India.
- Benchmark indices help investors understand how the overall equity market is performing.
The following table demonstrates some of the companies listed under NIFTY 50 in the semi-annual period from July – December 2019. The banking and finance sector is the most widely used and highly invested sector in our country. Information available on this website is solely for educational purpose only. The advice, suggestion and guidance provided through the blogs are based on the research and personal views of the experts.
It comprises of 12 of the most liquid banking stocks that are traded on NSE. It has representation of from the public sector, private sector, and foreign banks. These indices under the brand Nifty serve as a benchmark for measuring the performance of the stocks for specific sectors or industries. Businesses that share common products or services are grouped, such as auto, banks, etc.
What are the types of Nifty indices?
As mentioned earlier the Nifty50 represents 13 sectors of the Indian economy. Hence it is widely used by investors who want to get an overall view of the Indian stock markets and the Indian economy. The Bank Nifty on the other hand will give you a specialised view on the banking sector only. Over the years, the Indian stock markets have become the go to destination for the global investors who are always looking for superlative returns from their investments. It is a blended word – National Stock Exchange and Fifty coined by NSE on 21st April 1996. NIFTY 50 is a benchmark based index and also the flagship of NSE, which showcases the top 50 equity stocks traded in the stock exchange out of a total of 1600 stocks.
The lot size refers to the number of future and option contracts clubbed together for trading. The price of all the 12 stocks changes every second, or rather every fraction of a second, which can be tracked on a real-time basis, and the same can be tracked through your broker’s terminal as well. For what is nifty and bank nifty any sort of stock market index calculation, there is a base date and a base value.
The NIFTY share index is managed by a team of professionals at the NSE Indices Limited. It formed an Index Advisory Committee that offers its expertise and guidance on large-scale issues pertinent to equity indices. Let’s take a closer look at classification of Nifty indices as well as dig past its origin and calculation method.
What is meant by Nifty sectoral indices?
Also, Bank Nifty has a higher beta (is more volatile) than Nifty futures contract. Like the Nifty, those bullish on banks can buy Bank Nifty futures comprising 30 shares, or buy a call option on Bank Nifty. Bears can similarly short or sell Bank Nifty futures or buy a put option on the index. We specialize in delivering comprehensive financial planning and investment advisory assistance and services to individuals of any age, gender, income level and profession, families, and corporates. In terms of market capitalization, the Nifty50 is much larger than the Bank Nifty, since it is a broad market index comprising of 50 stocks as compared to 12 stocks in the Bank Nifty. The methodology involved in the calculation of indices also considers changes in corporate actions, which for instance comprise of rights issuance, stock splits, etc.
The NIFTY share market index is a benchmark standard against which all equity markets in India are measured. Therefore, NSE conducts regular index maintenance to ensure that it remains stable and persists as the benchmark in the Indian stock market context. Nifty is a stock market index used by the National Exchange of India (NSE) to track benchmark performance of the companies listed on the NSE—including NIFTY 50, NIFTY Next 50, and other key indices. The bank nifty option chain is useful, or we can say very popular, among all the F & O traders. The bank nifty option chain is the list of all the options expiring on a particular date, which are exasperatedly sorted in the order of the strike price.
As the name suggests it comprises of 50 of the largest and most traded companies that are listed in the exchange. Since it is a broad market index, the performance of Nifty is the performance of the entire stock market of India. Under the brand Nifty, there are over 350 indices whose job is to read movements of the stock market using the weighted average and market capitalization of companies representing different sectors of the economy. The Bank Nifty is also calculated using the free float market capitalization methodology. It serves there is one of the most important indicators for any investor who wants to track the banking sector of India and it is also used for derivatives trading. The Bank Nifty, formally known as the Nifty Bank index, is a specialised index that tracks the performance of the banking sector in India.