Definition
Bank Nifty
Bank Nifty (Nifty Bank) is the NSE index of the largest banking stocks and one of India's most heavily traded F&O underlyings.
Bank Nifty comprises the most liquid and large-capitalised Indian banking names, led by HDFC Bank, ICICI Bank, and SBI. It is more volatile than Nifty 50 because it concentrates on one rate-sensitive sector, which makes it a favourite among aggressive option and intraday traders.
Its large index moves and tight option spreads make Bank Nifty hugely popular for straddles, strangles, and directional plays. Being cash-settled, it avoids delivery risk, and traders should track the current SEBI-rationalised expiry schedule since weekly expiry availability has changed.
Related terms
- Nifty 50The Nifty 50 is the NSE's free-float market-cap-weighted benchmark index tracking 50 of India's largest, most liquid companies across sectors.
- Index Futures vs Stock FuturesIndex futures track a basket like Nifty and settle in cash, while stock futures track a single company and settle physically.
- Fin NiftyFin Nifty (Nifty Financial Services) is an NSE index of major financial stocks, with its own actively traded F&O contracts.
- India VIXIndia VIX is the volatility index that measures the market's expectation of near-term volatility, often called the 'fear gauge'.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.