NIFTY BANK

In this, it mainly comprises of the most liquid and large Indian Banking stocks. It also provides investors and market intermediaries a benchmark that captures the capital market performance of the Indian banks. The Index comprises a maximum of 12 companies listed on the National Stock Exchange of India (NSE). NIFTY Bank Index is computed using the free-float market capitalization method. It can also be further used for a variety of purposes such as benchmarking fund portfolios and launching of index funds, ETFs, and structured products. Also, the Eligibility Criteria for the Selection of Constituent Stocks:

The companies must rank within the top 800 based on both average daily turnover as well as average daily full market capitalization for the last 6 months.
Also, companies should form a part of the Banking sector.
Also, it's trading frequency should be at least 90% in the last 6 months.
It should also have a listing history of 6 months. Als, a company that comes out with an IPO, would be eligible for inclusion in the index, only when it fulfills the normal eligibility criteria for the index of about 3 months instead of six months.
Also, the companies that are allowed to trade in F&O segment are only eligible to be a component of the index.
The final selection of 12 companies shall be made based on the free-float market capitalization of the companies.
Also, the weightage of each stock in the index is to be calculated based on its free-float market capitalization in such a way that no single stock can be more than 34% and the weightage of the top 3 stocks cumulatively shall not be more than 63% during rebalancing.

Index Re-Balancing: It is done based on a semi-annual basis, and the cut-off date is January 31 as well as July 31 of each year, i.e., and for a semi-annual review of indices, average data for 6 months ending the cut-off date is considered. Also, 4 weeks before the notice is given to the market from the date of the change. Index Governance: Also, a professional team manages all NSE indices, and there is a three-tier governance structure, which comprises the Board of Directors of NSE Indices Limited, the Index Advisory Committee (Equity) and the Index Maintenance Sub-Committee.

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