Nifty PSU Bank

The NIFTY PSU Bank Index on the NSE monitors the performance of public sector banks, offering insights into their market trends and behaviour. It serves as a benchmark to assess the financial health and stock movements of government-owned banks, reflecting overall investor sentiment and sectoral performance.

The NIFTY PSU Bank Index tracks the performance of 12 public sector banks listed on the NSE. It is weighted based on free-float market capitalisation and reconstituted semi-annually. Stocks must meet eligibility criteria, including government ownership and trading frequency. The index value is calculated using a market capitalisation formula, reflecting sector trends. Rebalancing occurs in March and September, ensuring it accurately represents the PSU banking sector's evolving dynamics.

The NIFTY PSU Bank Index on NSE tracks the performance of public sector banks. Launched on August 30, 2007, with a base value of 1000 from January 1, 2004, it includes 12 tradeable PSU stocks and is reconstituted semi-annually. Managed by NSE Indices Limited, it follows a three-tier governance structure. The index also has a Total Returns variant, useful for ETFs, index funds, and portfolio benchmarking.

The NIFTY PSU Bank share price is determined by weighing its 12 stocks based on periodically capped free-float market capitalisation relative to a base market capitalisation in real time.

Eligibility criteria:

• Must be listed on NSE and part of the top 800 NIFTY 500 companies.

• At least 51% of share capital must be held by the central/state government.

• Should be in the public banking sector, have a 90% trading frequency, and a six-month listing history.

• PSU banks listed for at least a month can be included if meeting other criteria.

• IPOs qualify after three months.

Rebalancing caps: 33% per stock, 62% for the top three.

The NIFTY PSU Bank Index value is calculated using:

Index value = Current free-float market capitalisation / (Base free-float market capitalisation × Base Index Value)

It is reviewed semi-annually based on six months of data ending in January and July. Any stock replacements take effect on the last trading day of March and September.

Investing in the NIFTY PSU Bank Index offers exposure to leading public sector banks, benefiting from government backing and sectoral growth. It provides portfolio diversification, liquidity, and potential long-term gains from India's expanding banking sector. The index’s transparent methodology ensures fair stock selection, while semi-annual rebalancing keeps it relevant. Additionally, investors can access it via ETFs and mutual funds, making it an efficient way to invest in PSU banks.