The Indian banking system, reaping the benefits of strong credit off take and improved risk management practices, has continued to report increase in earnings over the last five years, while improving on its solvency profile substantially.

The emergence of the rural middle class segment and creation of many jobs in the last five years provided a large market for banks. To cater the needs of potential customers, public sector banks have taken various initiatives to improve their core fee income over the last few years.

The public sector banks with their existing widespread branch network have been primarily increasing their IT related expenditure. The core profitability of the public sector banks continue to rise on the back of improving operating efficiencies. PSU Banks account for 70.3 percent in terms of total assets held for 2006-07 along with total business share amounting to 73 percent for 2006-07.

Consolidation would further improve PSU banks' competitive edge against their private counterparts in servicing customers — both retail and corporate — in the international and domestic markets. Recognizing these changing dynamics of Indian banking industry, IISL has developed PSU Bank Index to capture the performance of the PSU banks.


Methodology

CNX PSU Bank Index is computed using free float market capitalization weighted method with base date of Jan 1, 2004 indexed to base value of 1000, wherein the level of the index reflects the total free float market value of all the stocks in the index relative to a particular base period. The method also takes into account constituent changes in the index and importantly corporate actions such as stock splits, rights, etc without affecting the index value.

Market Representation

• The CNX PSU Bank Index represents about 4.25% of the free float market capitalization of the stocks listed on NSE and 91.82% of the free float market capitalization of the stocks forming part of the PSU Banks sector Universe as on December 30, 2011.
  
  

• The total traded value for the last six months of all Index constituents is approximately 7.18% of the traded value of all stocks on the NSE and 42% 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. Constituent should be a Public sector bank



2. Constituent’s market capitalization rank in the universe should be among the top 500.



3. Constituent’s turnover rank in the universe should be in the top 500.



4. Constituent should have a positive Net worth.



5. The constituents should be available for trading in the derivatives segment (Stock Futures & Options market) on NSE.

Daily closing values


List of CNX PSU BANK Index Stocks