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Bank Nifty Adjustments on Friday, Several Stocks Likely to Fluster

08 January 20244 mins read by Angel One
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A Closer Look at Bank Nifty Changes

As per analysts, IndusInd Bank and Reliance Industries Ltd. will experience mega inflows due to this rebalancing by NSE.

On the other hand, research also suggests that ICICI Bank, Power Grid and State Bank of India (SBI) will witness major outflows owing to the rejig in pressure across Nifty50, CPSE and Nifty Bank indices.

On the Nifty50 index, the following companies will see an increase in weightage:

Additionally, the following companies along with five others will experience lower weightage from Friday onwards:

As far as HDFC Bank is concerned, it will witness outflows worth $15 million in Nifty50 and inflows worth $17 million in Nifty Bank because of this rebalancing. As a result, the net inflow of the company will come to $2 million.

Furthermore, the two stocks that will go through collective selling in Nifty Bank and Nifty50 are Kotak Mahindra Bank and ICICI Bank at $30 million and $38 million, respectively.

In the CPSE index as well, firms that will see major inflows are as follows:

Apart from ICICI Bank and HDFC Bank, AU Small Finance Bank and IndusInd Bank will also see an increase in weightage on Nifty Bank Index. Their weightage is likely to increase from 1.8% and 4.3% to 2.2% and 5.7%, respectively.

Regarding this, AU Small Finance Bank will experience inflows worth $17 million, whereas IndusInd Bank will be at %58 million.

What Is Bank Nifty and Its Rebalancing?

Bank Nifty is an index consisting of India’s most prominent and liquid capitalised banking stocks. It provides a benchmark to the investors capturing the market performance of these stocks. The index comprises 12 stocks from the banking sector.

Nifty indices’ capping factors are reallocated upon a change in investable weighted factor, equity and scrips replacement in the index. The recapping or rebalancing occurs during each quarter’s last trading day, i.e., March, June, September and December. This is performed by considering the closing price on a T3 basis, where T is the last day of trading of quarter-end.

Bottom Line

Rebalancing and recapping on the index assists market participants in understanding the institutional flows. Further, institutional investors indulging in the buying and selling of a stock specify their sentiments towards that particular stock, adding to the significance of this move.

Frequently Asked Questions

  1. How much outflow will RIL and IndusInd Bank see due to this rebalancing?

From Friday, IndusInd Bank and RIL will see major inflows worth $70 million and $148 million, respectively.

  1. What are the top stocks of Bank Nifty?

The top Bank Nifty stocks are ICICI Bank, HDFC Bank, Kotak Mahindra Bank, State Bank of India and Axis Bank Ltd.

  1. When was Bank Nifty launched?

This index was launched in 2003.

Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.

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