|Title: EVALUATING THE OPERATIONAL PERFORMANCE OF NIFTY 50-ASSOCIATED BANKS: AN EMPIRICAL INVESTIGATION OF EFFICIENCY RELATIVE TO INDEX WEIGHTAGE
Shireen Rosario and CA Reginald H.J. Rosario
The Nifty 50 Index, a prominent benchmark on the National Stock Exchange of India, has evolved into a cornerstone of the Indian capital market since its inception in November 1995. As of March 31, 2023, the Nifty 50 represented approximately 52% of the total full market capitalization and around 63% of the free float market capitalization of listed stocks on the NSE, showcasing its dominance in the Indian equity landscape. Apart from examining its growth, market representation, and sectoral composition and offering insights into its performance, this paper examines the performance of banks included in the Financial Sector, the largest among all sectors in the index and compares the performance against the weightage of the banks in the Index. With two powerful metrics i.e., Value Added Intellectual Coefficient (VAIC) and Return on Equity (ROE), the paper examines if the efficiency of the banks justifies its weightage in the Nifty 50 Index. The result indicates that apart from market capitalization, the efficiency of the bank plays a crucial role in the weightage, irrespective of the size of the bank.
|Keywords: Banking, Index, Performance, Nifty 50, VAIC.