SEBI expands Bank Nifty constituents, limits weight of top stocks
SEBI expands Bank Nifty constituents, limits weight of top stocks
The new norms would reduce concentration risk and ensure broader, balanced market representation
The Securities and Exchange Board of India (SEBI) has expanded the constituents and capped the weights of the op ones in non-benchmark indices, such as the National Stock Exchange (NSE) Bank Nifty.
The index will now require a minimum of 14 constituents (an increase from the current 12). The weight of the top constituent will be limited to 20 percent (reduced from 33 percent). Additionally, the combined weight of the top three constituents cannot exceed 45 percent (down from 62 percent).
The market watchdog's new norms will also rejig BSE's Bankex and NSE's FinNifty indices by adjusting the weights of individual stocks.
Regarding Bank Nifty, the heavyweights HDFC Bank, ICICI Bank, and the State Bank of India will see their weights reduced gradually in four tranches, concluding on 31 March 2026.
The first adjustment will happen in December 2025, followed by three additional rebalancings.
SEBI stressed that the new norms for derivatives on non-benchmark indices would mitigate risk for investors and funds.
Meanwhile, compliance with prudential norms may be implemented through constituent or weight adjustment in a single tranche for the two indices, Bankex and FinNifty. The effective date for implementation of the eligibility criteria was revised to 31 December 2025.
In each adjustment, the weight of the top three constituents would be checked. If the weights are beyond the prudential norms, the excess would be targeted for reduction equally over the remaining tranches.
The Bank Nifty constituents include IDFC First Bank, Canara Bank, Punjab National Bank, Federal Bank, Bank of Baroda, State Bank of India, AU Small Finance Bank, Axis Bank, IndusInd Bank, HDFC Bank, ICICI Bank, and Kotak Mahindra Bank.
