The Bank Nifty includes 12 of the most liquid and large-capitalized stocks from the banking sector that trade on the NSE. These 12 stocks are carefully selected to represent the sector effectively and serve as a benchmark for the capital market performance of Indian banks. Notably, it's a mix of both public sector and private sector banking companies.
The 12 stocks in the Bank Nifty are as follows:
1. State Bank of India (SBI)
2. Punjab National Bank (PNB)
3. IndusInd Bank
4. ICICI Bank
5. Bank of Baroda
6. Axis Bank
7. RBL Bank
8. Kotak Mahindra Bank
9. IDFC First Bank
10. HDFC Bank
11. Bandhan Bank
12. AU Small Finance Bank
These stocks have been chosen based on their market capitalization and liquidity quotient. Larger, more liquid companies have a greater influence on the index's movements.
One of the reasons for including only 12 stocks in the index is to focus on the best-performing and market-leading banking companies. Additionally, not all banks are listed on the stock exchange, and only listed banks can be included in the index. Hence, banks like Union Bank, IDBI Bank, Central Bank of India, and Maharashtra Bank, while listed, are not part of the Bank Nifty.
Trading in the Bank Nifty can be approached in two ways: if you hold a bullish outlook, you can opt to buy its futures; conversely, if you are bearish, you can engage in short selling. Both futures and options contracts for the upcoming three months are readily available on the exchange.
The Bank Nifty option chain serves as a comprehensive list of all options set to expire on a specific date, meticulously organized in accordance with their respective strike prices. The Bank Nifty future's pricing is influenced by factors like volatility and open interest (OI).
In terms of the lot size, it signifies the number of future and option contracts bundled together for trading purposes. This lot size consists of 15 contracts that are grouped accordingly, allowing for trading in multiples of 30, 45, 60, and so on. The standardization of lot sizes in derivative contracts aids traders in precisely determining the quantity of contracts involved in a trade, and these lot sizes may vary based on the price and trading volume of the security in question.
