FINNIFTY Stocks List, Weightage, Lot Size, Expiry, and FINNIFTY Index Details

This post was most recently updated on December 14th, 2023

The FINNIFTY Index, or the NIFTY Financial Services Index, is an essential benchmark in the Indian financial sector, launched by the National Stock Exchange (NSE) on January 11, 2021. This index is particularly significant for investors and traders focusing on India’s financial sector, one of the most rapidly evolving areas of the Indian economy. In this article, we will look at FINNIFTY Stocks List, Weightage, Lot Size, Expiry and important details about FINNIFTY Index.

Comprising 20 leading companies, the FINNIFTY Index provides a comprehensive overview of India’s financial industry. It was established with a base value of 10,000 and a base date of December 31, 2015. The selection of companies within the index reflects the performance and growth of the financial sector, including various segments like banks, financial institutions, housing finance, insurance, and other financial services.

The index’s strategic focus on the financial sector makes it a valuable tool for investors to gauge the health and trends of this critical segment of the economy. By tracking the FINNIFTY Index, investors can gain insights into the performance of top financial companies, helping them make informed investment decisions in this dynamic and crucial sector of the Indian economy.

Consider reading: Bank Nifty Index Stock List, Weightage and Details

FINNIFTY Stocks List

Consider reading: HDFC Bank Share Price Target

FINNIFTY Stocks Weigthage

Consider reading: ICICI Bank Share Price Target

Eligibility Criteria for FINNIFTY Stocks Index

The FINNIFTY Index follows meticulous eligibility criteria for the selection of its constituent stocks, ensuring a comprehensive and balanced representation of India’s financial sector. Here’s an overview of the criteria:

1. Constituent Base: Stocks considered for the FINNIFTY Index must be part of the Nifty 500 and represent the Financial Services sector, encompassing banks, financial institutions, housing finance, and other financial services.
2. Subsector Weight Calculation: Within this eligible universe, the weights of each subsector are calculated based on average free float market capitalization.
3. Selection of Companies: From each subsector, 20 companies are selected in such a way that their combined weightage closely aligns with the subsector’s weightage. This ensures a balanced representation of each subsector within the index.
4. Preference for F&O Listed Companies: A preference is given to companies that are available for trading in the NSE’s Futures & Options segment, ensuring liquidity and active market participation.
5. Market Capitalization Criteria: A company is included if its average free-float market capitalization is at least 1.5 times the average free-float market capitalization of the smallest index constituent, ensuring the index’s representation of significant players in the sector.
6. Cap on Individual and Collective Weightage: The weightage of each stock in the index is based on its free-float market capitalization, with a cap that no single stock can exceed 33% of the total index. Additionally, the cumulative weightage of the top three stocks cannot exceed 62% at the time of rebalancing, maintaining diversification and reducing concentration risk.

Consider reading: NIFTY 50 Index, Stock List and Weightage

FINNIFTY Index Lot Size

The FINNIFTY Index has a lot size of 40, signifying that each futures or options contract of the index represents 40 units. This lot size is set by the National Stock Exchange (NSE) and may vary based on market conditions. The calculation of the lot size involves a specific formula:

Lot Size = (Index Value * Contract Multiplier) / Lot Price

In this formula:

• The Index Value refers to the index’s closing value on the expiry day of the previous month’s contract.
• The Contract Multiplier is a fixed value of 0.0025, which scales the index value to an appropriate lot price range.
• The Lot Price is the index futures or options contract’s minimum tick size, set at Rs. 0.05.

For instance, the lot size for the FINNIFTY Index in December 2023 was calculated using the above formula with an index value of 20,969.40, resulting in a lot size of 40.

Consider reading: SENSEX Stock List, Weightage and Details

FINNIFTY Index Expiry Details

The FINNIFTY Index futures and options contracts have monthly, weekly, and daily expiry cycles. The monthly contracts expire on the last Thursday of the month, while the weekly contracts expire on every Thursday of the month, except the last Thursday. The daily contracts expire on every trading day, except the expiry day of the weekly or monthly contracts.

The expiry time of the FINNIFTY Index futures and options contracts is 3:30 PM (IST), which is the closing time of the NSE. The final settlement price of the index futures and options contracts is the closing value of the index on the expiry day.

Summary:

• The FINNIFTY Index futures and options contracts have monthly, weekly, and daily expiry cycles, which expire on the last Thursday of the month, every Thursday of the month, and every trading day, respectively.
• The expiry time of the index futures and options contracts is 3:30 PM (IST), which is the closing time of the NSE.
• The final settlement price of the index futures and options contracts is the closing value of the index on the expiry day.

Consider reading: Share Market Holiday List 2024 for NSE and BSE

FINNIFTY Index Rebalancing

The FINNIFTY Index, tracking the performance of the top financial sector companies in India, undergoes a semi-annual rebalancing process in June and December. This rebalancing is based on the average free-float market capitalization of the stocks over the previous six months. The process involves several steps:

1. Selection of Stocks: Eligible stocks are chosen based on criteria such as inclusion in the NIFTY 500 Index, belonging to the financial sector as per the Industry Classification Benchmark (ICB), having a minimum free-float market capitalization of Rs. 500 crore, a minimum average daily turnover of Rs. 5 crore in the previous six months, and a minimum impact cost of 1% for the same period.
2. Ranking of Stocks: The National Stock Exchange (NSE) ranks these eligible stocks in descending order based on their average free-float market capitalization over the past six months.
3. Selection of Top 20 Stocks: From this ranked list, the NSE selects the top 20 stocks to be the index constituents. If there are fewer than 20 eligible stocks, additional stocks from the NIFTY 500 Index meeting the set criteria are considered.
4. Calculation of Weights: The weights of the index constituents are calculated based on their free-float market capitalization as of the cut-off date, which is the last working day of May and November. These weights are normalized to total 100%.
5. Implementation of Changes: The NSE implements the changes in the index composition and weights on the first working day of June and December. These changes are announced in advance to market participants.

Important Information about the FINNIFTY Index

The FINNIFTY Index, beyond its fundamental aspects, encompasses several key details that are crucial for investors and traders to understand:

1. Trading and Settlement: FINNIFTY Index futures and options contracts are traded on the NSE’s Futures and Options (F&O) segment. The trading hours are from Monday to Friday, 9:15 AM to 3:30 PM IST. These contracts are settled in cash, meaning the difference between the final settlement price and the contract price is adjusted between the buyer and seller. They also undergo daily mark-to-market (MTM) settlement, where profits or losses are computed and settled daily based on the index’s closing price.
2. Margin Requirements: These contracts necessitate margin requirements, which are funds that must be deposited with the broker or clearing corporation as a guarantee for fulfilling contract obligations. The margin consists of initial margin (based on the index’s volatility) and exposure margin (based on the contract’s net outstanding position). The NSE periodically revises these requirements, and they are subject to change without prior notice.
3. Taxation: FINNIFTY Index futures and options contracts fall under the purview of the Income Tax Act, 1961. Their tax treatment depends on whether they are deemed speculative (settled without actual delivery of the underlying asset) or non-speculative (settled with the delivery of the asset). Generally, FINNIFTY Index futures are non-speculative, while options contracts are speculative. Tax rates and liabilities vary based on factors like holding period, turnover, income slab, and deductions. Investors and traders are advised to consult a tax expert for precise tax implications.

Final Thoughts on FINNIFTY Stocks List, Weightage, Lot Size, Expiry

In conclusion, the FINNIFTY Index is a significant financial benchmark in India, offering insights into the performance of the country’s leading 20 financial sector companies. As a free-float market capitalization-weighted index, it is recalibrated semi-annually to maintain accuracy and reflect corporate actions. The financial sector, comprising about 35% of the NIFTY 50 Index, is well-represented in the FINNIFTY, showcasing the sector’s diversity and growth potential.

FINNIFTY Index futures and options contracts are valuable tools for investors and traders. They provide opportunities to capitalize on index price movements with varying expiry cycles, including monthly, weekly, and daily. These derivative instruments are traded on the NSE’s Futures and Options (F&O) segment and involve cash settlement. Margin requirements and tax implications apply, varying based on the type of contract and the investor’s or trader’s profile.

Launched in January 2021, the FINNIFTY Index is relatively new with limited trading history and liquidity. Investors and traders should approach these instruments with caution and thorough due diligence. The inherent risks, market volatility, regulatory changes, and other unpredictable factors can impact the value and performance of these contracts. Independent research and consultation with a financial advisor are highly recommended before engaging in FINNIFTY Index futures and options trading.

FAQs on FINNIFTY Stocks List, Weightage, Lot Size, Expiry

What is the meaning of Finnifty?

FINNIFTY, or the Nifty Financial Services Index, represents the Indian financial services sector, tracking its performance through a portfolio of 20 selected stocks. These stocks are weighted by their free-float market capitalization, reflecting the real-time market dynamics of Indian financial companies.

Which company is Finnifty?

Finnifty, short for Financial Services Nifty, includes top Indian companies from the BFSI (Banking, Financial Services, and Insurance) sector. Major constituents are HDFC Bank, ICICI Bank, Kotak Mahindra Bank, SBI, Axis Bank, Bajaj Finserv, HDFC Ltd, and HDFC Life Insurance, among others. It represents the performance of the financial services sector on the NSE.

How many banks are there in Finnifty?

Finnifty, specifically representing the financial services sector, includes 10 prominent banks among its diversified collection of 20 stocks. These banks range from public to private sector institutions, effectively capturing the performance of India’s banking industry within the Nifty Financial Services Index.

What is the name of the index of Finnifty?

The Nifty Financial Services Index is commonly identified as ‘FINNIFTY’ in the stock market. This designation represents the index that tracks the performance of Indian financial service companies, including banks, financial institutions, housing finance, and other financial services entities.