SEBI capped a single stock at 20% and the top three stocks’ combined weight at 45%, reducing previous limits
NEW DELHI
The Securities and Exchange Board of India (SEBI) has announced new reforms for non-benchmark indices like the NSE’s Bank Nifty, aiming to reduce concentration risk and promote balanced market representation. Under the new guidelines, the number of Bank Nifty constituents will rise from 12 to 14, ensuring wider inclusion of banking stocks.
SEBI has also introduced limits on how much weight a single stock can hold. The top constituent’s weight will now be capped at 20 per cent, down from 33 per cent. Similarly, the combined weight of the top three stocks cannot exceed 45 per cent, compared to the earlier 62 per cent.
These changes will directly impact major players such as HDFC Bank, ICICI Bank, and State Bank of India, whose weights will be reduced gradually across four stages, concluding by March 31, 2026. The first rebalancing is scheduled for December 2025.
SEBI’s move will also affect BSE’s Bankex and NSE’s FinNifty indices, requiring adjustments to the weights of their top constituents. The aim is to strengthen market stability and reduce investor risk in derivatives trading linked to these indices.
The new prudential norms for Bankex and FinNifty derivatives will come into effect on December 31, 2025. During each phase, SEBI will review and adjust constituent weights to ensure compliance.
The expanded Bank Nifty index will now include banks such as HDFC, ICICI, SBI, Axis, Kotak Mahindra, IndusInd, and others, creating a broader, more balanced representation of India’s growing banking sector.
