SEBI expands Bank Nifty basket to 14 and trims index concentration risk

SEBI approved changes to the Bank Nifty methodology, expanding constituents from 12 to 14 and capping the top stock’s weight. Index managers said the tweaks improve diversification and reduce concentration risk after recent bank outperformance. Passive funds tracking the index will rebalance accordingly, potentially prompting modest flow shifts across private and public sector lenders. Traders expect transitional volatility around eligibility cut-offs and free-float calculations. Strategists advise monitoring weight changes, liquidity, and options positioning as adjustments phase in ahead of November monthly derivatives expiries and portfolio resets carefully.