The Indian banking Industry has been undergoing major changes, reflecting a number of underlying developments. Advancement in communication and information technology has facilitated growth in internet-banking, ATM Network, Electronic transfer of funds and quick dissemination of information. Structural reforms in the banking sector have improved the health of the banking sector. The reforms recently introduced include the enactment of the Securitization Act to step up loan recoveries, establishment of asset reconstruction companies, initiatives on improving recoveries from Non-performing Assets (NPAs) and change in the basis of income recognition has raised transparency and efficiency in the banking system. Spurt in treasury income and improvement in loan recoveries has helped Indian Banks to record better profitability. In order to have a good benchmark of the Indian banking sector, India Index Service and Product Limited (IISL) has developed the CNX Bank Index.

CNX Bank Index is an index comprised of the most liquid and large capitalised Indian Banking stocks. It provides investors and market intermediaries with a benchmark that captures the capital market performance of Indian Banks.The index will have 12 stocks from the banking sector which trade on the National Stock Exchange.


Methodology

CNX Bank Index is computed using free float market capitalization method with base date of Jan 1, 2000 indexed to base value of 1000, wherein the level of the index reflects total free float market value of all the stocks in the index relative to a particular base market capitalization value.The method also takes into account constituent changes in the index and importantly corporate actions such as stock splits, rights, new issue of shares etc. without affecting the index.

Market Representation

1. CNX Bank Index represent about 13.34% of the free float market capitalization of the stocks listed on NSE and 86.13% of the free float market capitalization of the stocks forming part of the Banking sector universe as on December 30, 2011.
   
   
2. The total traded value for the last six months of all Index constituents is approximately 14.84% of the traded value of all stocks on the NSE and 86.80% of the traded value of the stocks forming part of the Banking sector universe.

Selection Criteria

Selection of the index set is based on the following criteria:

1. Company's market capitalisation rank in the universe should be less than 500.
   
   
2. Company's turnover rank in the universe should be less than 500.
   
   
3. Company's trading frequency should be at least 90% in the last six months
   
   
4. Company should have a positive networth.
   
   
5. A company which comes out with a IPO will be eligible for inclusion in the index, if it fulfills the normal eligibility criteria for the index for a 3 month period instead of a 6 month period.
   
   
   
   

List of CNX Bank Index Stocks  | Daily Values