Bank NIFTY is the National Stock Exchange’s (NSE) index of banking stocks. It represents stocks of 12 of the most liquid and largest capitalized banks in India, trading on the National Stock Exchange (NSE). The Bank NIFTY index was launched in 2003. It is a useful benchmark for investors for banking stock investments.
Stocks in Bank NIFTY
Below stocks comprise the Bank NIFTY index.
- HDFC Bank Ltd
- ICICI Bank Ltd
- Kotak Mahindra Bank Ltd
- Axis Bank Ltd
- State Bank of India Ltd
- IndusInd Bank Ltd
- Punjab National Bank Ltd
- Bank of Baroda
- AU Small Bank Finance Ltd
- Federal Bank Ltd
- Bandhan Bank Ltd
- IDFC First Bank Ltd
How to invest in Bank NIFTY?
There are number of ways to invest in Bank NIFTY. Bank NIFTY is one of the most liquid index.
> Intraday trading
Intraday trading involves opening a position and closing it by the end of the day. Normally intra day traders look for aspects like volumes and volatility while trading. Bank NIFTY has high volumes and is also known for high volatility making it ideal for intraday traders to invest.
> Bank NIFTY Futures trading
In a futures trade, a buyer and seller agree to buy or sell the contract on a agreed upon date and price in the future. Here the buyer or the seller is compelled to exercise the contract at the end of the expiration date.
> Bank NIFTY Options trading
In a options contract, buyers and sellers agree to purchase or sell the contract at an agreed price on a future date. Here, the option buyers are not compelled to exercise their right of buying and selling. If they do not want to exercise their right, they can choose not to.
> Index funds
These are a type of mutual funds. These funds invest across sectors to make a balanced portfolio. These funds also invest in Bank NIFTY index. An investor could invest money in an index mutual fund and end up putting money in Bank NIFTY through the Index fund.
Why trade in Bank NIFTY?
A major reason why traders follow and put their money in Bank NIFTY is because it is very easy to track. This is because 5 banks (HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank and State Bank of India) make up 84% of the index.
Bank NIFTY is more volatile than other indexes. This gives more opportunities for traders to make potentially large profits. However the risk is also higher.
