Bank Nifty is also called Nifty Bank. It is an index that included various liquid as well as large capitalized Indian banking sectors. You know Bank Nifty provides investors with a benchmark that will acquire the capital market performance of Indian bank stocks. You know that the index is available with 12 stocks from the banking sector. That’s why you want to have an eye on the bank’s nifty share price to purchase the stock. If you look for the top stocks of the index such as HDFC Bank Ltd. 31.61%, ICICI Bank Ltd. 18.20%, Axis Bank Ltd. 13.02%, Kotak Mahindra Bank Ltd. 12.74% and State Bank of India 10.92%.At the same time, Bank Nifty is like others since it has a free-float market capitalization process. If you check the index variant then NIFTY Bank Total Returns Index or Bank Nifty TRI.
What is the Bank Nifty’s future and when it is introduced?
In general Bank Nifty Future is a derivative contract that will derive its value from the Bank Nifty index. The contract of Bank Nifty can be traded on the National Stock Exchange of India. At the same time, the Bank Nifty Future depends on the movement of high banking stocks in the index all because it derives its value from the Bank Nifty index.
The National Stock Exchange introduced future contracts on Nifty Bank Derivatives on the 13th of June 2005. Plus, if you check the Bank Nifty index that will stimulate the value of Nifty Bank derivative contracts. There are 12 most liquid as well as large banking stocks in India.
What is the weekly option available in Bank Nifty Share?
The weekly options contracts aren’t like the monthly options contracts all because that the weekly options contracts will get expire every Thursday. At the same time, this contract will give traders on the platform another sort of chance to trade even with smaller premiums as well as investments. Alongside, weekly options contracts will be more suitable for the weekly hedging at a lesser premium. In specific, if you check the period of global or domestic events. Plus, the usage of medium gets popular since traders choose the intraday trades as well as strategies, for example, buy today sell tomorrow (BTST). You are all set to make use of the product since it enhances liquidity in the futures and options segment and then you can manage the risks in both domestic or domestic events.
What Bank Nifty represents?
By means of the Bank Nifty, you will obtain so many numbers of benefits. As the bank Nifty that includes most liquid and large banking stocks listed on the NSE provides a benchmark for investors. The market intermediaries will acquire a lot size of CNX Nifty in the F&O (futures and options). It comes under the segment of the National Stock Exchange. If you check the size of CNX Nifty it is a lot since it has been revised upwards to 20.
Major things you want to know about Bank Nifty:
If you are going to invest in the Bank Nifty then you are required to know some points. Take a look underneath to know the points,
- Contract value:
For sure, you are required to know the contract value and then the approximate margin one has to put up to trade. If you check that level, the contract value way Rs 5.02 lakh. At the same, the margin to trade will surely vary from 7 to 10%.
- Risk of Bank Nifty:
You must understand the risk that you will get by means of choosing Bank Nifty. You are required to check the price movement for sure. It is the only way to reduce huge losses.
- How to avoid losses?
If you want to avoid unnecessary losses you ought to put a stop to loss while directing the dealer to execute the trade. For instance, if you are going long at 16743 and if the trader put a stop loss at 16643 the loss will be able to easily avoided to Rs 3,000 instead of losing Rs 7,290.
- What is an alternative way to avoid loss?
Obviously, you will easily reduce the loss amount by means of minimizing buying calls or puts for May expiry on Bank Nifty. At the same time, you will be able to easily limit the maximum loss even up to the premium paid to the seller for the call or else the put option. For example, if the most active 17000 call option was priced around Rs 151 at Friday closing. Plus, if you choose to buy the call would have had to pay a premium of Rs 4,530. You can also go for limitless profits by limiting the loss by the premium paid. If you check the futures, if you fail to stop loss then you will face unlimited profits or unlimited losses. Alongside, if you check call and put option sellers, you will acquire limited numbers of profit but you ought to face unlimited loss for sure.
You may also like to read, SGX Nifty Live: All You need to Know About SGX Nifty Live
Nifty Bank futures
If you check the futures contract is a forward contract. It will be able to trade on an Exchange. At the same time, the Bank Nifty futures contract completely depends on the index Bank Nifty index. NSE is the one that as an underlying index futures contracts. Along with that, you need to know some things such as expiry date and so on.
Bank Nifty futures contracts will have a maximum of 3 months trading cycle it includes the near month (one), the next month (two), and the far month (three).On the trading day, a new contract will be implemented and it will expire in three months. The new contract will also introduce for a three-month duration.
As mentioned before, the Bank Nifty futures contracts have an expiry period of three months. If the last Thursday is a trading holiday then the contracts expire on the last trading day. However, you must always monitor bank nifty share price to discover the right time to invest.