It is known for providing quick profits, and daily it moves around 2%-3%. Generally, mutual fund investors and retail investors use this index to understand how well their investment is performing.Īnother use of Bank Nifty is as an option.
If the fund had returned 23%, it would have outperformed the banking sector/index. So, in this case, the fund/portfolio couldn’t outperform the index. Now, Bank Nifty has provided a return of 21.21% in this one year. Let’s assume a fund manager or an investor has invested in a few banking stocks and earned a return of 18% in a year (2020-2021). The primary motto of any fund manager who is investing in a portfolio of banking stocks is to surpass the returns of Bank Nifty. It works like a benchmark for investors and mutual fund managers. Uses of Bank NiftyĪlso Read: Active Or Passive Investing: What's Your Choice Nifty 50 is for tracking the overall share market and the economy as a whole, whereas Bank Nifty solely tracks the performance of the banking sector. Bank Nifty, on the other hand, is a sectoral market index having only bank stocks. There are 2-3 stocks of each sector having the highest market capitalisation. It is an index comprising of stocks from all sectors.
There are a total of 12 stocks:ĭo you need help investing in ETFs, bonds, or other investment options? Master your investment journey with simple guides here How is Bank Nifty different From Nifty?īy 'Nifty', people generally refer to the broad stock market index (Nifty 50). Both private and public sector banking stocks are included in this index. It comprises stocks having the highest market capitalisation and high liquidity quotient. What is Bank Nifty?īank Nifty (also referred to as Nifty Bank) is a stock market index specifically designed to track the banking sector. Bank Nifty belongs to the latter category. In this context, it is worth mentioning that there are broad indices as well as sectoral indices. For tracking any investment or measuring its performance - whether the stock is performing well or not - the primary thing even a novice trader or investor does is to compare it with the stock market index.