Bank Nifty is a stock market index in India that represents the performance of the banking sector. It is derived from the National Stock Exchange of India (NSE) and consists of the most liquid and large-cap banking stocks listed on the exchange. Bank Nifty serves as a benchmark for investors and traders to track the overall performance of the banking sector in the Indian stock market.
The index is calculated using free float market capitalization weighted methodology, which means that the weight of each constituent stock is determined by its market capitalization adjusted for the proportion of shares available for trading in the market. The index composition is reviewed periodically to ensure that it accurately represents the banking sector's performance.
Bank Nifty provides a broad view of the banking industry's health and serves as a tool for investors to analyze and make decisions related to banking stocks. It is widely used by traders, fund managers, and market participants to track and trade the banking sector's performance through derivatives such as futures and options contracts.