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The Nifty PSU Bank Index captures the performance of Public Sector Unit (PSU) banks. All public sector banks that are traded (listed & traded and not listed but permitted to trade) at the National Stock Exchange (NSE) are eligible for inclusion in the index subject to fulfilment of other inclusion criteria namely listing history and trading frequency.
Nifty PSU Bank Index is computed using the free-float market capitalisation method, 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 market capitalisation value. The index follows a periodic capped free-float methodology to ensure balanced representation across constituent public sector banks.
An index variant, the Nifty PSU Bank Total Returns Index, is also available for tracking total returns including dividend distributions. The index is managed by a professional team under a three-tier governance structure comprising the Board of Directors of NSE Indices Limited, the Index Advisory Committee (Equity), and the Index Maintenance Sub-Committee. As of September 30, 2025, the index comprises 12 constituents and is calculated in real-time during market hours.
Nifty PSU Bank Index can be used for a variety of purposes such as benchmarking fund portfolios, launching of index funds, ETFs, and structured products. The index provides investors and fund managers with a comprehensive benchmark to track the performance of public sector banks within the Indian equity market.
The Nifty PSU Bank Index was launched on August 30, 2007. The base date for the index is January 1, 2004, with a base value of 1,000.
The index is rebalanced on a semi-annual basis. The cut-off dates are January 31 and July 31 of each year, meaning that for the semi-annual review of indices, average data for six months ending the cut-off date is considered. Four weeks’ prior notice is given to the market from the date of change.
As of September 30, 2025, the top constituents of the Nifty PSU Bank Index by weightage are:
The following eligibility criteria are applied for selection of constituent stocks:
The index uses the periodic capped free-float methodology. The calculation frequency is real-time, providing continuous updates during market hours.
As of September 30, 2025, the index demonstrated the following performance characteristics:
Returns (Total Return Index):
Fundamentals:
Risk Metrics (based on Price Return Index):
Companies must have 51% or more of their outstanding share capital held by the central government and/or state government, directly or indirectly. This is the key criterion that distinguishes PSU banks from private sector banks in the index composition.
The index shows higher volatility with an annualised standard deviation of 42.58% and delivered exceptional returns of 43.94% over 1 year as of September 30, 2025. It trades at significantly lower valuations with a P/E ratio of 7.82 and P/B ratio of 1.23, compared to private banks, whilst offering a higher dividend yield of 2.49%.
The index shows high concentration with State Bank of India accounting for 32.84% of the index weight as of September 30, 2025. The top three banks—State Bank of India, Bank of Baroda, and Canara Bank—together represent 60.39% of the index, close to the 62% cumulative cap for the top three stocks.
