Finnifty, officially known as the Nifty Financial Services Index (Nifty FinServ), is a sectoral stock market index in India that represents the performance of the financial services sector. It includes a wide range of financial companies, such as banks, non-banking financial companies (NBFCs), housing finance companies, insurance companies, and others.

Key Features of Finnifty:

  1. Composition:
    • Finnifty comprises 20 companies from the financial services sector.
    • It is broader than Bank Nifty, as it includes not just banks but also other financial institutions like NBFCs and insurance providers.
  2. Sectoral Focus:
    • It gives a comprehensive view of the financial services sector, which is a significant contributor to the Indian economy.
  3. Market Representation:
    • Finnifty accounts for a major portion of the Nifty50, as the financial sector is one of the largest in terms of market capitalization.
  4. Base Year and Value:
    • The base year for Finnifty is 2004, with a base value of 1000.

Companies in Finnifty:

Finnifty includes a mix of banks, NBFCs, housing finance companies, and insurance companies. Some of the prominent companies (as of recent data) are:

  1. HDFC Bank
  2. ICICI Bank
  3. State Bank of India (SBI)
  4. Kotak Mahindra Bank
  5. Axis Bank
  6. HDFC Ltd (now merged with HDFC Bank)
  7. Bajaj Finance
  8. Bajaj Finserv
  9. ICICI Lombard General Insurance
  10. HDFC Life Insurance
  11. SBI Life Insurance
  12. LIC of India (Life Insurance Corporation)
  13. Housing Development Finance Corporation (HDFC)
  14. Cholamandalam Investment and Finance
  15. IDFC First Bank
  16. Punjab National Bank (PNB)
  17. Bank of Baroda
  18. IndusInd Bank
  19. AU Small Finance Bank
  20. Power Finance Corporation (PFC)

(Note: The list is periodically reviewed and may change based on market conditions and company performance.)

How Finnifty Works:

  1. Calculation:
    • Like other Nifty indices, Finnifty is calculated using the free-float market capitalization-weighted method.
    • Companies with higher free-float market capitalization have a larger impact on the index.
  2. Rebalancing:
    • The index is reviewed semi-annually (every six months) to ensure that it reflects the current state of the financial services sector.
  3. Movement Representation:
    • A rise in Finnifty indicates strong performance in the financial services sector, while a decline shows weaker performance.

Benefits of Finnifty:

  1. Comprehensive Sectoral Insight:
    • It provides a broader view of the financial sector compared to Bank Nifty, covering banks, NBFCs, and insurance.
  2. Trading Opportunities:
    • Traders use Finnifty futures and options for short-term trading and hedging strategies.
  3. Economic Indicator:
    • The financial services sector is closely tied to economic growth. Finnifty’s performance reflects the financial sector’s health and its contribution to the economy.
  4. Investment Benchmark:
    • Finnifty serves as a benchmark for funds and ETFs focused on the financial services sector.

Popular Usage:

  • Derivatives Trading: Finnifty futures and options contracts are traded on the NSE, offering diversification within the financial sector.
  • Sectoral Comparison: Helps investors compare the financial sector’s performance with other sectors or indices like Nifty50 and Bank Nifty.
  • Portfolio Diversification: Investors use Finnifty as a tool for gaining exposure to a wide range of financial stocks.

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