Nifty 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.

The Nifty 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.

The total traded value for the last six months of all the 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 of the index set is based on the following criteria:

• Company's market capitalisation rank in the universe should be less than 500.
• Company's turnover rank in the universe should be less than 500.
• Company's trading frequency should be at least 90% in the last six months.
• Company should have a positive networth.
• 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.