Nifty PSU Bank (NIFTY PSU BANK) live share price today at NSE
Nifty PSU Bank Index - A Brief Introduction
The Nifty PSU Bank Index is a sectoral index that tracks the performance of the PSU banks listed on the National Stock Exchange (NSE) Limited. It is a real-time index that helps investors understand the behaviour and performance of the public sector banks over a specific time frame. Nifty PSU Bank index is also used as a reference for developing and comparing the performance of passive index funds and Exchange Traded Funds (ETFs).
The Nifty PSU Bank Index consists of 12 NSE-listed equity shares of Indian PSU banks and was launched on 30th August 2007 with a base date of 1st January 2004. Some of the major constituents of the index include companies like State Bank of India, Bank of Baroda, Canara Bank, and many other big PSU Banks.
NSE Indices Limited undertakes the governance of the PSU Bank Index through a three-tier structure of the Board of Directors of NSE, the Index Advisory Committee (Equity), and the index maintenance subcommittee.
Nifty PSU Bank Index - Formula and Calculation
The Nifty PSU Bank index is calculated using the free-float market capitalisation method. This method calculates the index share price while considering its base market cap and base index value.
The free-float market cap refers to the aggregate market capitalisation of only those outstanding shares that are available for trading in the secondary market, excluding all the restricted shares.
Nifty PSU Bank Formula = Free Float market capitalisation / (base market capitalisation* base index value)
Eligibility Criteria For The Nifty PSU Bank Index
The stocks must be listed on the National Stock Exchange (NSE).
The ownership of the Central Government or the State Government should be at least 51%.
The trading frequency of the company must be at 90% in the last six months.
The company's listing history must be at least 1 month as on the cut-off date.
No stocks should have a weightage of more than 33%, and the cumulative weightage of the top 3 stocks should not be more than 62% at the time of rebalancing.
The final selection of stocks for the index should be based on the company’s free-float market capitalisation.
The PSU bank must rank within the top 800 based on average daily turnover and average daily full market capitalisation for the last six months.
PSU Bank stocks listed and traded, and not listed but permitted to trade, are eligible for inclusion in the index if they meet the criteria mentioned above. The Nifty PSU Bank stock index is rebalanced semi-annually, and the cutoff date for such a rebalancing is January 31 and July 31 of each year.
Key Takeaways on Nifty PSU Bank Index
The Nifty PSU Bank is a market index that tracks the overall performance of the 12 PSU Bank stocks.
This index comes under the umbrella of the Nifty Sectoral Index segment.
It is calculated using the free float market capitalisation method.
The primary goal of the Nifty PSU Bank Index is to evaluate the cumulative performance and sentiment of the top 12 PSU Bank stocks listed on the NSE.
Stocks in this index are included if they fulfil the eligibility criteria listed by NSE.
FAQs
What are PSU banks?
Public sector undertaking banks (PSU Banks) are government-operated banks in which the government owns the majority share. The minimum shareholding of the national government or the state government in the PSU banks is at least 51%, ensuring that these banks work in the best interest of their customers.
How can I invest in the Nifty PSU Bank Index?
You can invest in the PSU Bank index by manually buying stocks in the same weight as they are present in the index. Also, Exchange Traded Funds (ETFs) and index mutual funds, which replicate the performance and behaviour of the Nifty PSU Bank Index, are another method of investing in this Nifty index.
How can I use Univest to invest in PSU Bank stocks?
You can invest in the PSU bank stocks based on the high-quality stock recommendations provided by Univest through its mobile application. You can download the Univest application from the Google Play and the App Store.
What is free float?
Free float, also known as public float, refers to those equity shares that are available for public trading on the secondary market. Free float excludes the shares held by the promoters, government, or insiders of the company.
What is a cutoff date?
The cutoff date refers to a specific date on which a stock market index is rebalanced. In the case of the Nifty PSU bank index, the cutoff dates are January 31 and July 31 of each year.