NIFTY BANK Index   (BANK)

The Bank Nifty index represents the largest and most liquid Indian banking stocks in terms of interest income and market capitalization.

The index provides investors and market intermediaries a benchmark that captures the capital market performance of these Indian banks. There are 12 banks included in this index.

To dwell deeper about the index, check out how the stocks in the NIFTY BANK index are performing today.

For a sector overview, read our banking sector report.

Also check out Equitymaster's powerful stock screener to find the best banking stocks in India.

Investment in the Bank Nifty index can be done in three ways:

• Spot trading or buying shares of Bank Nifty constituents: Spot trading means buying the scripts in Bank Nifty index. It involves buying the equivalent equity shares of various listed companies in the Bank Nifty index.

• Derivative trading: Nifty futures and Nifty options can be used to invest in Nifty Bank derivatives.

  Nifty Bank Future contracts derive their value from the behaviour of the Nifty Bank index. If the value of the Nifty Bank index goes up, then the value of the future also rises, and vice versa. One can buy this contract by placing an order with the broker.

  Nifty Bank Options are similar to future contracts. Here, the buyer of the contract has to pay a premium and has a right to buy or sell the contract. These contracts can be bought or sold through a broker.

• Nifty Bank Index Fund: An investor can invest in Bank Nifty index by investing in the Nifty Bank index fund. This is a fund which tracks the performance of the Nifty Bank index and their constituents.

The index comprises of 12 banking sector banks. These banks are selected on the basis of interest income and market capitalization. The index includes banks from public sector and private sector banks too.

HDFC Bank, ICICI Bank, SBI and Kotak Mahindra Bank are the ones with highest market capitalization and weightage in the index.

For the entire list of the Bank Nifty stocks, check out the list of Bank Nifty companies.

The index is computed using free-float adjusting market capitalization with a base value of 1,000 and a base date of 1 January 2000.

The performance and the price movement of the Nifty Bank are dependent on the top 5-6 highest weightage stocks.

The following are the top five stocks by weightage as of June 2022:

The NIFTY BANK Index was at 50,372.9 (down 0.5%).The index is down 3.1% over the last 30 days. And over the last 1 year, it has gained 15.6%.

Within the NSE Bank Nifty Index, the top gainers were FEDERAL BANK (up 2.0%) and AU SMALL FINANCE BANK (up 0.8%). On the other hand, PNB (down 4.5%) and SBI (down 2.6%) were among the top losers.

Well, one cannot directly buy the Nifty Bank index like a normal stock. But one can replicate the stock holdings through index funds and derivatives.

So indirectly, it is possible to purchase the Bank Nifty index. This can be done in the ETF form.

As these are stock indexes made up of multiple stocks, an investor cannot directly buy the index from the stock market. There are derivatives such as Options and futures that lets you take exposure in the Bank Nifty index.