NSE revamps Nifty Bank and Financial Indices to meet SEBI's derivatives norms

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NSE Indices has rolled out a major overhaul of how some of India's most traded sectoral indices are constructed, aligning them with SEBI's enhanced risk-monitoring and eligibility norms for derivatives. The changes tighten weight caps, expand the stock universe for key benchmarks and reshape the treatment of demergers within the Nifty family.

The Nifty Bank and Nifty Financial Services indices will see revised weightage rules that sharply restrict concentration among the top three constituents. Their weights will now be capped at 19%, 14% and 10% respectively, while non-F&O stocks will face a 4.5% individual cap and a 10% cumulative ceiling. The Nifty Financial Services index will implement these changes in a single tranche on the last trading day of December 2025, while the Nifty Bank index will absorb the adjustments in four stages from December 2025 through March 2026.

NSE Indices has also expanded the Nifty Bank universe from a maximum of 12 stocks to 14, with selection driven by six-month average free-float market capitalisation and enhanced circuit-filter scrutiny. The new framework ensures that only stocks with lower instances of hitting price bands in the past six months qualify for inclusion.

In line with the revised criteria, Union Bank of India and Yes Bank have been added to the Nifty Bank index, with the inclusions taking effect from 31 December 2025.

The index manager has further tightened the methodology for handling demergers within the Nifty suite. For stock-based demergers, parent companies will now be retained in the index if a special pre-open session is held on the ex-date. Spun-off entities will be temporarily added as dummy stocks and removed once they meet a defined period of stable trading without hitting lower circuits. The new demerger rules come into force on 15 December 2025.

NSE Indices, which manages the widely tracked Nifty 50 and a broad suite of sectoral, thematic and fixed-income indices, said the revised norms ensure continued compliance with SEBIs tightened framework for derivative-linked benchmarks and help strengthen market stability and monitoring.

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