The Nifty Financial Services Index (FinNifty) was launched on January 22021, and it is one of the sectoral indices that are part of the broader Nifty index family. The index is computed using the free float market capitalization methodology, which means that only the shares available for trading in the market are taken into consideration while computing the index.
It tracks the performance of the top 20 companies listed on the NSE from the financial services sector. The companies included in the Fin Nifty index are from various sub-sectors such as banks, non-banking financial companies (NBFCs), housing finance companies, insurance companies, and other financial services companies. The Fin Nifty index is also a market capitalization-weighted index, and it is widely used by investors to track the performance of the financial services sector in India.
List of FinNifty Bank Stocks in India
|Name||Percentage||Market Capitalization(in thousand Cr.)|
|Kotak Mahindra Bank Ltd||9.72%||242.03|
|Axis Bank Ltd||7.54%||188.53|
|State Bank of India||6.79%||169.68|
|Bajaj Finance Ltd||5.37%||134.08|
|Bajaj Finserv Ltd||2.42%||60.45|
|Hdfc Life Insurance Ltd||2.35%||58.81|
|SBI Life Insurance Ltd||1.82%||45.41|
|ICICI Lombard General Insurance||1.09%||27.19|
|Cholamandalam company Ltd||0.99%||24.83|
|Shriram Transport Finance Ltd||0.88%||22.08|
|Piramal Enterprise Ltd||0.84%||21.10|
|ICICI Prudential Life Insurance Ltd||0.77%||19.35|
|SBI Cards and Payment Service Ltd||0.75%||18.87|
|HDFC Asset Management Ltd||0.70%||17.58|
|Muthoot Finance Ltd||0.45%||11.07|
|Power Finance Corporation ltd||0.44%||10.97|
|NIFTY FINANCIAL SERVICES||100%||2503.6|
Please note that the composition of the Nifty Fin index is reviewed twice a year, in January and July, and any changes in the index’s constituents are based on various factors such as market capitalization, liquidity, and trading activity. Therefore, the companies listed above may change over time.
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The Nifty Fin index is an important benchmark for investors who are interested in investing in the financial services sector in India. It provides them with a measure of the overall performance of the sector, which can help them make informed investment decisions. The index is also used by fund managers who specialize in financial services sector funds to benchmark their fund’s performance against the broader market.
How it’s calculated?
The Nifty Financial Services Index (FinNifty) is calculated using the free-float market capitalization methodology. This methodology takes into account only the shares that are available for trading in the market and excludes shares that are not available for trading such as promoter shares, strategic holding, and government holding.
The index is calculated in real-time during the live market.
The formula for calculating the Fin Nifty index is as follows:
- FinNifty = (Total Market Capitalization of all companies in the index / Base Market Capitalization) x Base Index Value
Total Market Capitalization of all companies in the index = Sum of the market capitalization of all the companies in the index.
- Base Market Capitalization = the total market capitalization of the index at the base date. The base date for the Nifty Fin index is January 1, 2014, and the base value is set at 1,000.
- Base Index Value = the value of the index on the base date. For the Nifty Fin index, the base value is set at 1,000.
For example, if the total market capitalization of all companies in the index is ₹10 lakh crores, and the base market capitalization is ₹ 5 lakh crores, and the base index value is 1,000, then the Nifty Fin index value would be:
FinNifty = (10, 00,000 / 5, 00,000) x 1,000 = 2,000
Therefore, the Nifty Fin index value, in this case, would be 2,000.
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How to Trade FinNifty?
Trading in the Nifty Financial Services Index (Nifty Fin) can be done in several ways, including:
1. Trading through a stockbroker:
To trade in the Nifty Fin index, you need to have a trading account with a stockbroker who is registered with the National Stock Exchange (NSE) in India. You can place orders to buy or sell Nifty Fin index futures or options contracts through your broker’s trading platform.
2. Investing in exchange-traded funds (ETFs):
ETFs are financial instruments that track the performance of an index, such as the Nifty Fin index. You can invest in Nifty Fin index ETFs, which are listed on the NSE and traded like stocks. By investing in Nifty Fin ETFs, you can get exposure to the financial services sector in India.
3. Investing in mutual funds:
Mutual funds are investment vehicles that pool money from investors and invest in a diversified portfolio of stocks, bonds, or other assets. Some mutual funds in India specialize in the financial services sector and invest in companies that are part of the Nifty Fin index. By investing in such mutual funds, you can get exposure to the financial services sector in India.
4. Trading in Nifty Fin index futures and options contracts:
You can also trade in Nifty Fin index futures and options contracts, which are derivative contracts that allow you to buy or sell the index at a predetermined price on a future date. Futures and options contracts can be used for hedging or speculation purposes, but they carry higher risks than other forms of trading or investing.
5. Trading in Nifty Fin index-based mutual funds:
Mutual funds can also be designed to track the performance of the Nifty Fin index. These mutual funds invest in companies that are part of the Nifty Fin index, and their returns are closely linked to the index’s performance.
When trading or investing in the Fin Nifty index or financial services sector, it is important to keep an eye on economic and political developments that may affect the sector’s performance, such as changes in interest rates, government policies, and global economic trends. It is also important to have a disciplined approach to trading or investing and to have a proper risk management strategy in place.