Nifty PSU Bank

The Nifty PSU Bank Index comprises 12 public sector banks and tracks their performance through free-float market capitalisation weighting. The current constituents, their sectors and index weights are shown below. 

Weights are based on the latest available index data and may change with periodic rebalancing and market movements.

The Nifty PSU Bank is an NSE sectoral index that tracks eligible public sector banks. A public sector bank needs to meet specific ownership, liquidity, trading and listing requirements to be considered for inclusion. 

The index has a launch date of 30 August 2007, a base date of 1 January 2004, and a base value of 1,000. NSE Indices Limited manages the index under its index governance framework. The index is also available in a Total Returns Index (TRI) version, which considers both price changes and dividends from constituents. 

The index is reviewed semi-annually using data for the six months ending January and July. Its stock weights are based on free-float market capitalisation, subject to the applicable concentration limits. 

The index value is calculated using the free-float market capitalisation of its constituent stocks. In simple terms, stocks with a higher eligible free-float market capitalisation have a higher weight in the index. 

The basic calculation can be represented as: 

Index Value = Current Free-Float Market Capitalisation ÷ Base Market Capitalisation × Base Index Value 

For example, assume the combined free-float market capitalisation of the index is ₹5 lakh crore, and the base market capitalisation is ₹50,000 crore. With a base value of 1,000: 

Index Value = ₹5,00,000 crore ÷ ₹50,000 crore × 1,000 = 10,000 

This is a simplified example. Actual index calculations also consider adjustments for corporate actions and other changes. 

The main criteria used for selecting constituents include: 

• The bank should rank within the top 800 based on average daily turnover and full market capitalisation. 
• At least 51% of its outstanding share capital should be held by the Central Government or State Government, directly or indirectly. 
• Its trading frequency should be at least 90% over the previous six months. 
• It should have at least one month of listing history as of the applicable cut-off date.

The index is rebalanced semi-annually, with January 31 and July 31 serving as the cut-off dates. 

1. The stock must be listed on the National Stock Exchange.

2. It should be among the top 800 companies in NIFTY 500 list.

3. At least 51% of the company’s shares must be owned by the central or state government.

4. The company must be part of the Public Banking sector.

5. The stock should have been traded at least 90% of the time over the past six months.

6. The company must have been listed for at least six months. However, if a company is newly listed, it can be included after three months if it meets all other criteria.

7. If there are fewer than 10 eligible PSU banks, other top 800 stocks from NIFTY 500 list are considered, based on their trading activity and market size.

8. To be included, a stock’s market value must be at least 1.5 times that of the smallest stock in the index.

9. During rebalancing a single stock can’t make up more than 33% of the index and the top three stocks together can’t exceed 62% of the index.

Nifty PSU Bank index tracks the performance of these PSU banks, with its value reflecting the combined market performance of these stocks.
 

The Nifty PSU Bank works by tracking changes in the prices of its constituent public sector banks. Each stock affects the index according to its assigned weight. 

For example, if a stock has a 30% index weight and another has a 5% weight, the same percentage movement in both stocks will have different effects on the index. The stock with the higher weight will have a larger impact. 

The index is not equally divided among all 12 banks. Instead, free-float market capitalisation determines the relative weight of each stock, subject to the prescribed caps. 

The index is reviewed semi-annually. Changes in eligibility, market capitalisation and other prescribed criteria can result in stocks being added or removed during these reviews. 

The following are some features that may be relevant when tracking or investing through products linked to the index: 

• Sector-focused exposure: The index covers public sector banks through a single benchmark. 
• Multiple constituents: It includes 12 eligible public sector banks. 
• Rules-based selection: Stocks are included based on defined eligibility conditions. 
• Market-cap weighting: Stock weights reflect free-float market capitalisation, subject to limits. 
• Periodic review: The index is reviewed semi-annually under the prescribed methodology. 

The Nifty PSU Bank Index was created to track the performance of public sector banks in the Indian equity market. Its launch date is 30 August 2007, base date is 1 January 2004,  and base value is 1,000. 

The index is maintained by NSE Indices Limited and forms part of the sectoral index category. Its methodology has evolved through changes in eligibility and index construction rules. 

The current framework requires public sector banks to meet ownership, liquidity, trading frequency and listing requirements. The final weights are based on free-float market capitalisation, subject to stock and top-three concentration limits. 

The index is reviewed semi-annually. This allows its constituent list and weights to be updated based on the prescribed criteria and market data. 

Investors cannot directly purchase an index. They can instead access securities or investment products that track the index. 

The basic process can include: 

• Open a Demat and trading account: A Demat account is required to hold listed securities such as shares and exchange traded funds (ETFs). 
• Research the available options: Investors can review individual constituent stocks, ETFs, or index funds linked to the Nifty PSU Bank. 
• Check the product details: The expense ratio, tracking difference, liquidity and portfolio composition can be reviewed for an ETF or index fund. 
• Place the transaction: Purchase the selected shares or ETF units that suit your goals. 

Investors should also review the applicable costs, market risks and product documents before making a transaction. 

The index cannot be purchased directly. Investors can access individual constituents, ETFs, or index funds that track the Nifty PSU Bank. 

Nifty PSU Bank stocks are public sector bank shares included in the Nifty PSU Bank Index based on prescribed eligibility criteria. 

The index itself cannot be traded like an individual share. Its constituent stocks can be traded through the applicable exchange and trading account. 

The Nifty PSU Bank Index launch date is 30 August 2007. 

The index itself cannot be bought or sold. Individual stocks or exchange traded products linked to the index can be traded according to applicable market rules. 

The bank needs to meet public ownership, market activity, trading frequency, listing history and free-float market capitalisation requirements. 

Yes. Several ETFs and index funds track the Nifty PSU Bank Index, subject to their respective scheme terms and availability.