Decoding the Concept of Bank Nifty :- Effects of it on Indian Market

Bank Nifty is the most influential element in the Indian Market. In Indian Markets We often mention that when Reliance Performs the entire market reacts to it. The reason behind this is that Reliance holds 10.20% share in the Nifty 50. This means that the Nifty 50 reacts for 10% when Reliance performs. But in reality the finance sector dominates the Nifty50 Segment. The reason is that the Financial sector accounts for 37.92% share in the Nifty 50. Of this 37.92%, 10.80 % belong to finance companies such as HDFC (6.89%), Bajaj Finance (2.28%), Bajaj Finserv (1.06%), SBILife (0.57%) and HDFC Life ( 0.87%). Rest of the 26.55% belongs to the Bank Nifty Companies. 

Hence the net effect of Bank Nifty companies on Nifty 50 is 26.55%.

Among the share distribution of Banks in Nifty 50 the proportion of various companies are as follows :

  • HDFC Bank (9.72%)
  • Axis Bank (2.84%)
  • ICICI Bank (6.56%)
  • IndusInd Bank (0.83%)
  • Kotak Bank (4.05%)
  • SBI Bank (2.14%)


Bank Nifty consists of all the Financial companies in it. These financial companies are all banks. Hence the index is known as Bank Nifty. The most powerful bank in India is obviously RBI. But among the commercial banks SBI holds the maximum strength. Similarly among the private companies the most powerful bank is HDFC Bank. Also Reliance HDFC banks also leave a drastic impact on Nifty 50 index. The reason is the 9.72% weightage associated with it. The bank Nifty consists of 12 stocks. The base for the index is taken as 1 January, 2000.

The base value of Bank Nifty was 1000 Rs. Today it has 34800 Rs valuation per piece. The highest valuation of Bank Nifty is 37000 Rs. The index was initially launched in 2003 Sept. The return for 18 years accounts to 205% per year, with an overall return of 3700%.

Futures and Options With Bank Nifty

The Bank Nifty is the most volatile index in India. It operates in Futures and Options contracts as well. The lot size of Bank Nifty for Futures purchase is 25 units. Hence one lot at price of 35000 Rs accounts for 8.75 Lakh Rs. The future expiry for Bank Nifty works as per the other elements of market only. Hence it expires on the last Thursday of every month.

The options of Bank Nifty operate in a very unique manner. The special feature is the expiration date for it. The Bank nifty Options expire on every Thursday. Thus the options are traded for one week.

The Bank Nifty Futures trade at an average premium of 80 to 100 Rs from its cash price. However the premium amount shows fluctuation based on the market situations. The most fluctuation is noticed when the future contacts expire.

Bank Nifty accounts for a minimum of 300 to 500 Points movement on any given day. Thus the traders always keep an eye on this index.

Composition of Bank Nifty

Bank Nifty Consists of the top performing banks in India. The composition is based on 12 stocks entirely. The latest share are mentioned in the list below :


It is the most powerful bank in Indian financial system after the RBI. SBI aces with the amount of deposits that add up to its tally every year. SBI is not a volatile stock. The Nifty 50 share of SBI is 2.14%. SBI accounts for 11.74% share in bank Nifty.


HDFC Bank is the most dominating private bank in India. It is so strong and fundamental that Nifty 50 comprises 9.72% weightage of it. HDFC Bank accounts for 27.41% part in bank Nifty.


It is the fourth most important private bank in India after Kotak bank and ICICI. It is included in Nifty 50 with a share of 2.84%. Axis Bank accounts for 14.03% part in bank Nifty.


It is the second most private bank in India. The Nifty 50 share of ICICI is 6.56%. ICICI Bank accounts for 21.09% part in bank Nifty.


The CEO of Kotak Mahindra bank is Uday Kotak. He is the most successful banker in India. He is one of the masters in banking business and has changed the entire Kotak bank around in the past 10 years. Kotak Bank holds 4.05% share in Nifty 50. Kotak Bank accounts for 13.02% part in bank Nifty. 


The bank is a part of Nifty 50 as well. Its share in it is 0.83%. IndusInd Bank accounts for 4.57% part in bank Nifty.


It is the newly found Banking share. It’s share price doubled after the COVID fall. However the current prices are lower than its actual worth. Bandhan Bank accounts for 1.93% part in bank Nifty.


The bank posted its first profits in the previous financial year. IDFC First Bank accounts for 1.26% part in bank Nifty.


AU Small Finance Bank accounts for 1.84% part in bank Nifty.


Federal Bank accounts for 1.38% part in bank Nifty.


The bank is trying to recover from its previous blows of fraud. Punjab National Bank accounts for 0.73% part in bank Nifty.


RBL Bank accounts for 0.72% part in bank Nifty.

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