NSE revises Nifty Bank Index: Adds Yes Bank and Union Bank in major revamp

NSE Finalizes Major Revisions to the Nifty Bank Index Methodology

The National Stock Exchange (NSE) has finalized significant revisions to the methodology of the Nifty Bank Index, marking one of the most substantial structural changes to the benchmark in recent years.

Key Changes to the Nifty Bank Index

• The Nifty Bank index will expand to a fixed 14 constituents, up from the previous maximum of 12.
• Constituent selection will be driven primarily by six-month average free-float market capitalization.
• Stocks eligible for trading in the NSE's derivatives segment will be given preference for inclusion.
• Fixed weight caps for the top three constituents: 19% for the largest, 14% for the second, and 10% for the third.
• Weights of all other constituents will be tiered beneath the top three in descending order.
• Non-F&0 stocks will see a 4.5% individual cap and 10% cumulative ceiling.

Implementation Timeline

The revised index will be implemented in four phased tranches:

• December 2025
• January 2026
• February 2026
• March 2026

Notable Additions and Adjustments

Two new entrants, Yes Bank and Union Bank of India, will be added to the index, while the gradual reweighting of the top three banks will occur across the scheduled quarterly reviews.

Expected Weight Changes

Nuvama's estimates indicate that the multi-stage recalibration will trigger steady adjustments in stock weights.

Heavyweights such as HDFC Bank and ICICI Bank are expected to see material weight reductions through the four-month transition, while mid-tier banks are expected to gain weight.

The newly added Yes Bank and Union Bank of India are expected to see incremental increases as the cap-based normalisation progresses.

Flow Analysis

Nuvama's flow analysis suggests significant cumulative outflows for the largest constituents and sizeable inflows for the new additions and rising mid-tier names.

Last Updated: December 2, 2025