FinNifty Index: Everything You Need to Know

FinNifty Index: Everything You Need to Know

Introduction:

The FinNifty index, which falls under the umbrella of the Nifty Financial Services Index, provides insights into the performance of India's financial sector. This includes banks, non-banking finance companies, housing finance companies, insurers, asset management companies, credit card companies, and other financial services entities. Comprised of 20 stocks listed on the National Stock Exchange (NSE), FinNifty was introduced in September 2011 with a base date of January 1, 2004. Importantly, this index, like its counterparts, is rebalanced every six months, with the cut-off dates for rebalancing set as January 31 and July 31 of each year.

To be eligible for inclusion in the FinNifty Index, financial services companies must be part of the Nifty 500 universe. Additionally, no single stock can account for more than 33% of the index, and the cumulative weightage of the top three stocks should not exceed 62% during rebalancing. Noteworthy constituents of the FinNifty Index include HDFC Bank, India's largest private bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, State Bank of India, Bajaj Finserv, Bajaj Finance, HDFC Life, SBI Life, and Shriram Finance.

In January 2021, the NSE introduced futures and options (F&O) contracts for the Nifty Financial Services Index, with FinNifty as the underlying index for these derivatives. Settlement for these derivatives occurs on the last Tuesday of the expiry period, unless it falls on a trading holiday, in which case the previous trading day becomes the expiry day. Moreover, FinNifty Index Options have both weekly and monthly expiries, while FinNifty Index Futures are settled on a monthly basis. It is worth noting that the current lot size for FinNifty is 40.

Introduction:

The FinNifty index, which falls under the umbrella of the Nifty Financial Services Index, provides insights into the performance of India's financial sector. This includes banks, non-banking finance companies, housing finance companies, insurers, asset management companies, credit card companies, and other financial services entities. Comprised of 20 stocks listed on the National Stock Exchange (NSE), FinNifty was introduced in September 2011 with a base date of January 1, 2004. Importantly, this index, like its counterparts, is rebalanced every six months, with the cut-off dates for rebalancing set as January 31 and July 31 of each year.

To be eligible for inclusion in the FinNifty Index, financial services companies must be part of the Nifty 500 universe. Additionally, no single stock can account for more than 33% of the index, and the cumulative weightage of the top three stocks should not exceed 62% during rebalancing. Noteworthy constituents of the FinNifty Index include HDFC Bank, India's largest private bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, State Bank of India, Bajaj Finserv, Bajaj Finance, HDFC Life, SBI Life, and Shriram Finance.

In January 2021, the NSE introduced futures and options (F&O) contracts for the Nifty Financial Services Index, with FinNifty as the underlying index for these derivatives. Settlement for these derivatives occurs on the last Tuesday of the expiry period, unless it falls on a trading holiday, in which case the previous trading day becomes the expiry day. Moreover, FinNifty Index Options have both weekly and monthly expiries, while FinNifty Index Futures are settled on a monthly basis. It is worth noting that the current lot size for FinNifty is 40.

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