- Nifty, also referred to as Nifty 50, is a leading index that comprises some of the largest companies on the National Stock Exchange (NSE) of India.
- The Bank Nifty comprises 12 large and most liquid stocks from the Indian banking sector traded at the National Stock Exchange (NSE).
- The Nifty Call can also be used as a hedging tool against a portfolio.
It is generally recommended for investors and traders to invest in Nifty or Nifty Bank. The main reason behind this is that Nifty contributes to about 75% of the total turnover of the NSE market. When Bank Nifty and Nifty calls are simultaneously used for trading, it can maximize opportunities while minimizing risks or losses.
There are several advantages of trading in Nifty Bank or Nifty call. We would be discussing in detail about these advantages in this article.
About Bank Nifty
The Bank Nifty comprises 12 large and most liquid stocks from the Indian banking sector traded at the National Stock Exchange (NSE). Nifty Bank generally provides a benchmark to traders, as well as market intermediaries, to capture the performance of the Indian banking sector in the market. Since there are 12 major banks registered on the NSE, one can easily keep a check on the changes in the price trend, along with the pricing of Nifty Bank.
The Nifty Bank is referred to as the Index of banking sector stocks. Twelve banks are included in the Bank Nifty Index. These are ICICI Bank, HDFC Bank, Axis Bank, Kotak Bank, State Bank of India, Federal Bank Ltd, RBL Bank Ltd, IndusInd Bank Ltd, Yes Bank Ltd, and Bank of Baroda.
Advantages of Bank Nifty Call
In the case of price fluctuations in the Bank Nifty Call, there is a direct effect on Bank Nifty Index. With a good performance in the banking sector, the banking stocks start trending up, and even the bank nifty index starts going up. Similarly, Nifty Bank starts going down whenever there is bad news in the domestic or global banking sector. In such a scenario, investors or traders might have to short sell their Nifty Bank and buy at a later stage.
Nifty, also referred to as Nifty 50, is a leading index that comprises some of the largest companies on the National Stock Exchange (NSE) of India. Nifty generally has a barometer of about 23 different sectors of the Indian economy. In case there is any major movement, be it upward or downward in these 50 major companies, the Nifty 50 index would move accordingly. Nifty comprises of around 75% of the total turnover of the NSE F&O market. Nifty brings several odds in favor of the trader.
The major firms that are a part of this Nifty 50 Index are TCS, Titan, Coal India, Reliance, BPCL, Axis Bank, ITC, ICICI Bank, HDFC Bank, L&T, IndusInd Bank, UPL, Maruti, Wipro, SBI, Bajaj Finance, Tata Motors, and so on.
Advantages of Nifty Call
When one can predict the trend going on in the market, especially of the stock holdings of the 50 large companies in Nifty, it becomes easier to make money through Nifty Index trading. In case of bad news, such as negative government policy, an increase in corporate tax rates, or an increased number of imports for most of these firms, there can be some great profits on short selling on the Nifty Index. On the other hand, you can also sense good news for the stocks of these major firms that can happen due to some domestic news, such as positive global news or a decrease in corporate taxes.
The Nifty Call can also be used as a hedging tool against a portfolio. It also has several liquid options and fewer margins. Nifty 50 is a highly diversified index that has a few margins. It also has more liquidity than Nifty Bank and is easier to predict. One can also buy the Nifty Index and start making profits. This can be done by selling at a higher rate for a particular trading day. The nifty call is a great way to earn high profits; however, one must be aware that just like high profits, it can also cause high losses.
There are several benefits of both Nifty Bank, as well as Nifty Call, as the article above illustrates. However, one should be careful while trading in both of them, as they can cause significant profit or loss. The good idea is to invest in both of them to minimize the risks involved.