Nifty Psu Bank Overview | Indian Indices by Motilal Oswal

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What is NIFTY PSU Bank?

NIFTY PSU Bank is a specialised index that focuses on tracking the performance of public sector undertaking (PSU) banks listed on the National Stock Exchange (NSE) in India.

This index provides investors with a comprehensive view of how PSU banks are performing relative to each other and to the larger market. The index includes 12 major PSU banks like State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda (BOB), and others.

How to Calculate NIFTY PSU Bank?

The calculation of the NIFTY PSU Bank index follows a free float weighted average market capitalisation methodology. Market capitalisation reflects the total value of a company's outstanding shares, calculated by multiplying the current share price by the total number of shares outstanding.

The formula used is: NIFTY PSU Bank Index = (Sum of Market Capitalisation of Constituent Stocks) / (Base Market Capitalisation) × (Base Index Value). The index undergoes periodic rebalancing twice each year where adjustments are made to constituent stocks' weights based on their updated market capitalisation.

How to Invest in NIFTY PSU Bank?

As an investor, you have several options to gain exposure to the NIFTY PSU Bank index. Exchange-traded funds (ETFs) and index funds that track the index's performance aim to replicate the index's returns by holding a portfolio of stocks similar to the index constituents.

Another option is through structured products or derivatives linked to the NIFTY PSU Bank index. It's essential to conduct thorough research and assess your risk tolerance before investing in any financial product linked to the NIFTY PSU Bank Index.

Index FAQ's

As of 22nd May 2024, the PE ratio of NIFTY PSU Bank is approximately 27.9, indicating how much investors are willing to pay per rupee of earnings. The PB ratio stands at around 3.66, reflecting the market value compared to the book value of the constituent banks.

As of 22nd May, 2024, the 52-week high for the NIFTY PSU Bank Index is around 7,686, while the 52-week low is approximately 3,946. These figures provide investors with a sense of the index's volatility and market trends over the past year.

The market capitalisation of the NIFTY PSU Bank Index is the sum total (free float) market value of all the constituent PSU banks. As of 22nd May 2024, the combined market cap of the NIFTY PSU Bank Index is roughly ₹5.12 Lakh Cr.

Public Sector Undertaking (PSU) banks in India are regulated by the Reserve Bank of India (RBI), which is the country's central bank. The RBI oversees their operational guidelines, risk management practices, and compliance with banking regulations. Additionally, the Ministry of Finance plays a crucial role in policy formulation.

The first PSU bank in India is the State Bank of India (SBI), which originated as the Bank of Calcutta in 1806, later renamed the Bank of Bengal, then Imperial Bank of India before being nationalised and renamed SBI in 1955. SBI holds the highest market cap and 33% weightage in the NIFTY PSU Bank index.