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What is Bank Nifty Future? How to trade in Bank Nifty Future?

 

In our exchange more than 40 banking stock listed in which STATE BANK OF INDIA (SBI), PUNJAB NATIONAL BANK (PNB), BANK OF BARODA (BOB), BANK OF INDIA (BOI), CANARA BANK are popular public sector banks. In private banks HDFC BANK, ICICI BANK, AXIS BANK, KOTAK MAHINDRA BANK, YES BANK, INDUSIND BANK are populars banks of India.

So The Nifty Bank Index (also know as Banknifty Index) comprises of the most liquid and large Indian Banking stocks. It provides investors and market intermediaries a benchmark that captures the capital market performance of Indian Banks. The index comprises of maximum 12 companies listed on National Stock Exchange of India (NSE). HDFC Bank, ICICI Bank, Kotak Mahindra Bank, State Bank of India, Axis Bank, Indusind Bank, RBL Bank, Federal Bank, Bank of Baroda are main bank nifty index stocks.

Exchanges allowing trading in stocks as well as in Index also, Example - suppose some one want to buy all the main banking stock, so it will be better to buy Banknifty.. So to make it easy exchange started trading in Banknifty Future. Banknifty Future lot size is 25 now (Previously it was 20). So one can buy Banknifty Future instead to buy each banking stock one by one. It is also tough to watch all the banking stocks daily. So one can buy Banknifty Future and it is easy to track it.

As we know its lot size 25 , suppose for example Banknifty Future Sep 2020 contract currently running on 22000 and you want to buy this , so your trade value will be

25 (lot size) x 22000 (banknifty future Sep 20 contract) = 5,50,000 (Total trade value)

So does it means you require Rs. 5,50,000 to buy or sell Banknifty Future ? Answer is NO. To trade in Banknifty Future, some margin required only . Generally it comes around Rs. 1 Lac this time. If stock market becomes very volatile then exchange can increase the margin also.

So if you have Minimum Rs. 1 Lakh, you can buy or sell Banknifty Future. It is not compulsory that you should have Banknifty Future in your portfolio to sell it. You can sell it first and later you can buy it . But we suggest you, if you are new to stock market and do not have the capital of Rs. 100000 , then do not trade in Banknifty Future.

Exchange giving you some option to trade in Banknifty Future. Like if you think that Banknifty will jump next month and you do not want to buy current month Banknifty Future, then there is next month contract also available. You can buy that contract. All the contract expires on Last Thursday of the Month. Suppose you bought Banknifty Future Nov 2020 contract, it means you will have to square off your position on or before 26 Nov 2020. If you will not, then exchange will settle it at settlement price.

Let us take one example :- (in below calculations Brokerage and taxes not included, which one has to pay in each trade)

Suppose you bought today Banknifty Future at 25500 on 05 NOV 2018 and sold next day at 25600 , it means you gained 100 points, so your profit will be

25 (lot size) x 100 (Gained point) = Rs. 2,500 (Profit)

Suppose you bought today Banknifty Future at 25500 on 05 NOV 2018 and sold out same day at 25300, it means you lost 200 points, so your loss will be

25 (lot size) x 200 (point you lost) = Rs. 5,000 (Loss)

Suppose you Sold today ( Shorted ) Banknifty Future at 25500 on 05 NOV 2018 and bought (covered ) same day at 25400 , it means you gained 100 points, so your profit will be

25 (lot size) x 100 ( Gained point) = Rs. 2,500 (Profit)

Suppose you Sold today ( Shorted ) Banknifty Future at 25500 on 05 NOV 2018 and bought (covered ) after 5 days at 26000 , it means you lost 500 points and your loss will be

25 (lot size) x 500 (point you lost) = Rs. 12,500 (Loss)

Now I hope that Banknifty Future trading concept is clear to you. If you want to share your view with us or having any kind of query and want to ask any question then you can post it here, as soon as possible, you will get the reply.You can directly write to us to email id "stocknifty@yahoo.com" or call at +919981722011.