Here are the new SEBI rules for the Nifty Bank and its impact on stocks

Market regulator Securities and Exchange Board of India (SEBI) has issued a circular on the implementation of eligibility criteria, primarily impacting the Nifty Bank index.

According to this circular, there will be staggered deadlines for derivative eligibility rules, and also provides a relief from the May 29 directive.

The SEBI circular states that the weight of the top constituents of an index will be capped at 20% from 33% currently, while the combined weight of the top three constituents cannot exceed 45%, compared to the current 62%.

This means, that the top three constituents of the Nifty Bank, HDFC Bank, ICICI Bank and State Bank of India

(SBI), will see a gradual reduction in weightage.

The norms also state that all non-benchmark indices, on which derivatives are traded, such as the Nifty Bank, should have a minimum of 14 stocks in it. The Nifty Bank currently has 12 constituents.

As of September 30, HDFC Bank had a 28.49% weightage on the Nifty Bank, while ICICI Bank had a 24.38% weightage, followed by SBI, which is a distant third at 9.17%. Kotak Mahindra Bank (8.97%) and Axis Bank (8.78%), complete the top five on the Nifty Bank.

This also means that stocks like Yes Bank, Indian Bank, Union Bank of India, and Bank of India could become the four new candidates for inclusion to the Nifty Bank index. The adjustment will be done in four tranches till March 31, 2026, with the first one taking place in December 2025.

According to Nuvama Alternative & Quantitative Research, Yes Bank and Indian Bank's inclusion in the Nifty Bank could result in inflows worth $104.7 million and $72.3 million respectively.

In case all four lenders highlighted above are included, Nuvama Alternative expects inflows worth $107.7 million for Yes Bank, $74.3 million for Indian Bank, $67.7 million for Union Bank, and $41.5 million for Bank of India.

Shares of Union Bank of India are trading with gains of 4.4%, while those of Bank of India, Indian Bank and Yes Bank are trading with gains between 1.5% to 2.5%.