Index Trading Nifty | Bank Nifty | Fin-Nifty

Index trading in the Indian stock market has huge popularity among investors and traders. Index trading involves buying and selling securities of a particular index, it’s a way to participate in the overall market movement without investing in the particular stock.

Actively traders index in National Stock Exchange (NSE) Nifty 50, Bank Nifty, and Fin Nifty which represent the performance of the top 50 companies listed on the NSE, banking sector, and financial sector.

Advantage of Trading in Index:

It provides exposure to a diversified portfolio of stocks, which help to reduce the risk of investing in a particular stock. Index trading provides investors and traders to participate in an overall market movement without buying a particular stock.

Index future and option trading:

Traders need to have an understanding of the underlying market. It is also important to have a proper disciplined trading strategy and risk management plan to minimize the loss and increase the profit potential. There are several key factors to consider, technical aspects, corporate announcements, and news evert all that can impact the performance of the index, basically a trader should keep an overall market sentiment and volatility levels.

Which index to be traded among Nifty, Bank Nifty, and Fin Nifty:

It's highly recommended start with Nifty then you can prefer Bank Nifty and then Fin Nifty the reason behind this is if you’re a beginner then Nifty is less volatile than Bank Nifty because Nifty is a combination of 50 stocks and Bank Nifty is a combination of only banking stocks due to which Bank Nifty is highly volatile and then Nifty and Fin Nifty can be considered as a third priority in which sometimes you can face liquidity problem in very deep ITM Strike price particularly.

Nifty 50 Index:

• A combination of India's top 50 companies has a different weightage in the sector like
• Reliance Industries has 10.4%, HDFC Bank 9.6%, ICICI Bank 7.44%, Infosys 7.2%, Housing Development Finance Corporation 6.06% and the list goes on.
• I have mentioned only the top 5 weightage into this Nifty 50 index covering around 30% of the index Weightage.
• Nifty future and options lot size are 50 quantities.

Bank Nifty index:

• Bank nifty future and options lot size are 25 quantities, this index has 12 stocks from the banking sector.
• HDFC Bank 28.48%, ICICI Bank 20.51%, Axis Bank 13.23%, Kotak Mahindra Bank 13.10%, State Bank of India 12%, and IndusInd Bank 4.62%
• I have mentioned the top 6 weightage stock in Bank Nifty. These 6 stocks are covering almost 92% of the weightage of Bank Nifty.

Fin Nifty Index:

• It consists of 20 stocks which are characterized as banking stocks, financial institutes, Housing Finance Companies, insurance companies, and Financial Service companies.
• HDFC banks consist of 27.3%, HDFC of 17.51%, ICICI Bank 14.14%, Kotak Mahindra Bank 12.1%, Axis Bank 6.46%, Bajaj Finance 5.64%,
• I have mentioned these 6 stocks which consist of more than 65 % in Finance Nifty.

You should know the weightage of the stocks in that particular sector is because if at all your trading on a directional basis if all that particular stock is moving and there is a high chance that that particular index will also move in that direction.

To learn about future and option trading basics and make your foundation strong then I highly recommend you have to go through our Option Foundation Course..

Thanks,

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