Stock Market Indices give an insight into the overall trends of the stock market and sentiment of the investors towards a particular stock or set of stocks in an industry. Simply, an index is the stock exchange creating a portfolio of the top companies held by it based on market capitalization in the respective category.
What is FinNifty?
FinNifty is a National Stock Exchange (NSE) index which comprises a total of 20 stocks of banks, financial institutions, housing finance companies, insurance companies and other financial services companies.
It was launched by NSE Indices Limited (formerly known as India Index Services & Products Limited) in September 2007 to help investors and other players in the market to capture a reflection of the behaviour and performance of the Indian financial market.
Eligibility criteria for getting listed under FinNifty
- Stocks of companies which are a part of Nifty 500 and belong to financial institutions, banks, housing finance, insurance companies and other financial services are eligible to become a part of Fin Nifty.
- The weightage of each sub-sector in Fin Nifty is calculated as per the average free-float market capitalization.
- The weightage of the 20 companies representing different sub-sectors is made in such a manner that it closely matches with the respective sub-sector weightage.
- Within each sub-sector, the stocks of those companies are preferred that are listed on NSE’s Futures & Options (F&O) segment.
- Only those companies are included in the Fin Nifty index whose average free-float market capitalization is 1.5X of the average free-float market capitalization of the smallest constituent of the index.
- No stock is given a weightage of more than 33%. Also, the weightage of the top three stocks cumulatively should not exceed 62% at the time of rebalancing, which happens semi-annually
FinNifty – Portfolio Characteristics
|Methodology||Periodic Capped Free Float|
|No. of Constituents||20|
|Launch Date||September 07, 2011|
|Base Date||January 01, 2004|
|Calculation Frequency||Real Time|
List of FinNifty Bank Stocks in India
|Company Name||Weightage in FinNifty*||Market Cap (in INR Cr.)|
|HDFC Bank||19.70%||7,72, 079|
|State Bank of India||10.67%||4,18,297|
|Kotak Mahindra Bank||8.89%||3,48,579|
|HDFC Life Insurance||2.81%||1,10,126|
|SBI Life Insurance||2.68%||1,05,043|
|ICICI Prudential Life Insurance||1.69%||66,095|
|ICICI Lombard General Insurance||1.58%||61,859|
|Power Finance Corporation||0.75%||29,424|
|Shriram Transport Finance||0.75%||29,203|
|Mahindra & Mahindra Financial||0.45%||17,771|
How to invest in FinNifty stocks?
To invest in FinNifty you need to open Demat account with a trusted online stock broker. Also, following investment advice from experts is great but doing your own analysis and research is very important. Start today, start slow and build your wealth gradually.
Disclaimer: This blog is not to be construed as investment advice. Trading and investing in the securities market carries risk. Please do your own due diligence or consult a trained financial professional before investing.