The performances of various banks, real-estate companies, insurance companies, NBFCs, and other financial service companies were tracked by The Nifty Financial Services Index. The index contains 20 shares and the stock weight is based on the free-float market capitalization.
Financial services firms are critical to economic success over time. The state of financial services in India is constantly changing and emerging. Banks have historically played a very important role in the financial system, transferring more money from depositors to borrowers, and continuing to do so. Like banks, housing finance companies, and NBFCs support debt creation and growth across the economy.
Insurance companies facilitate the integration of risks so that individuals and firms can focus on their core business, knowing that they are financially secure in the event of an emergency. Asset Management Companies facilitate savings and investments and help investors achieve their financial goals.
The Nifty Financial Services Index provides various disclosures to banks, real estate agents, insurers, NBFCs, and other financial companies. Banks account for 63.1% of the Nifty Financial Services Index, followed by Housing Finance Company at 18.5%. NBFCs and insurance companies weigh 8.1% and 8.0% respectively. Other sectors of Financial Services and Financial Institutions account for equally 2.4% of the weight of the Nifty Financial Services Index. These sectors include Asset Management and Public Sector Undertaking (PSU).
Investor’s Benefit: Investors will be getting huge exposure in various areas of financial industry via Nifty Financial Services Index The Nifty Financial Services Index than Nifty Bank Index and broader market indicators. The Nifty Financial Services Index has successfully implemented broad market indicators with Nifty Bank in the long run.
The performance of Nifty Financial Service Index was better than those of Nifty 50 and Nifty Bank with 18.7% CAGR return equal to 13.9% return for Nifty 50 Index and 16.9% CAGR return of the Nifty Bank Index. 5 years ago, in the period December 31, 2015, to December 29, 2020, the Nifty Financial Services Index returned 17.3% CAGR compared to 13.3% CAGR of the Nifty 50 Index and 13.7% CAGR of the Nifty Bank Index.