How To Trade In Bank Nifty?

Nifty is a broad term that represents many companies included in NSE (National Stock Exchanges), Bank nifty is one such part of it. Bank nifty is a great way to generate a good amount of returns for any investors in the market. As the name suggests, bank nifty includes banking companies in India.

Meaning of Bank Nifty

Before moving anywhere let’s understand the meaning of bank nifty. Bank nifty is an index comprising the stocks of the top 12 banking companies. It is a benchmark index which shows the performance of banking companies listed under NSE India.

Bank nifty is also referred to as nifty bank sometimes. This index was launched in the year 2003 and it includes large capitalised and highly liquid shares of banking companies.

Companies Included in Bank Nifty

Following are the banking companies included in Bank Nifty as on 5th August 2022:

Companies Asset (%)
HDFC Bank 34.59
ICICI Bank 23.40
Kotak Mahindra Bank 12.84
Axis Bank 11.72
State Bank of India 8.70
Induslnd Bank 3.39
Bandhan Bank 1.49
AU Small Finance Bank 1.05
Federal Bank 0.86
IDFC First Bank 0.80
Punjab National Bank 0.68
Bank of Baroda 0.49

How to Trade in Bank Nifty?

To start your trading in a bank nifty you need to first understand the chart of bank nifty. So basically the bank nifty chart is used to determine and understand the movement in the price of banking stocks. With the help of this chart, we can easily identify the trends and pick the best stocks for us. The data in the chart is available for multiple time frames such as weekly, monthly etc.

You can trade in bank nifty in the following ways

  • Intraday trading – In intraday, you can open a bet at the beginning of the day and close at the end of that particular day. If you want to generate returns in Intraday trading you just need to focus on two aspects. The first one is trading volume and another is price fluctuations in the market. Trading volumes refer to the volume of shares that come from purchasing and buying stock in a specified period. Whereas price fluctuations refer to changes in the price of stocks during a specified period.
  • Future and Options – Trading in future and options is similar to intraday trading. Future and options both are a type of contract where buyers and sellers come into an agreement of buying the shares on a future day. On options, buyers have the advantage of cancelling the contract if the price is not suitable for them in the future.

Bank nifty is a great way to generate returns in a short period. But at times it is slightly risky if you are not investing with a proper strategy. So before picking any stocks from bank nifty, do the trend analysis and research as it will help you reduce the risk attached to your investments.

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