Bank Nifty: Index or a Joke ?

Amused to see that top 2 index constituents account for around 50% and top 3 index constituents account for around 65% of an Index !

Take a bow, NSE.

3 replies on “Bank Nifty: Index or a Joke ?”

The same is true for ‘Nifty’ also where financial/financial services account for 37.65% of the weight as on 31st May 2018. Which is lop sided and very heavy and leads to illogical conclusions.

same holds true for most of the indexes, even Nifty and Sensex where top 5-6 stocks make up 50-60% of the weight. 3-4 years back ITC had 50% weight in FMCG index hence ICICI Pru FMCG fund had 52% investment in a single stock ITC (classic case of benchmark hugging by fund managers) -so much for investing in a “Diversified ?” FMCG fund. Benchmarking a Mutual fund scheme against such indexes completely destroys the creativity/skills of a fund manager who in order to protect their job do benchmark hugging to a great extent so that they don’t underperform the index.

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