What is the Nifty NBFC Index? Constituents, Historical Performance, and Selection Criteria

Published on June 30, 2026 | 6 min read

What is the Nifty NBFC Index? Constituents, Historical Performance, and Selection Criteria

Key Takeaways

The Nifty NBFC Index is a sectoral index that tracks the performance of top Non-Banking Financial Company (NBFC) stocks within the Nifty Total Market Index.
The constituent companies are selected from the Nifty Total Market Index based on the eligibility criteria set by NSE Indices Ltd.
The Nifty NBFC Index is reconstituted semi-annually and rebalanced quarterly to ensure it accurately reflects the performance of the NBFC sector.
Investing in the Nifty NBFC Index offers multiple benefits such as diversification, high growth potential, innovation, and financial inclusion.
The Nifty NBFC also carries certain risks such as sector concentration, regulatory dependence, asset quality risk, and unfavourable changes in interest rates.

On June 17, 2026, NSE Indices Limited, a subsidiary of NSE Limited, introduced 11 new sectoral indices to offer a detailed representation of the performance of various sectors. One of those indices includes the Nifty NBFC Index, which tracks the performance of NBFC stocks to provide a comprehensive representation of the sector’s performance.

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Let’s understand what the newly introduced Nifty NBFC Index is, how it works, its constituents, historical performance, and

What is the Nifty NBFC Index?

The Nifty NBFC Index is a sectoral index that aims to track all the NBFC companies’ stocks included in the Nifty Total Market Index. The constituent companies provide financial services such as loans, investments, and asset financing. Since these companies do not have a banking license, they are not categorised as banks.

The NBFC sector is a vital part of the Indian financial system. It acts as a financial intermediary, mobilising savings and investments, serving the unbanked and underserved sectors of the economy.

The index consists of 19 constituent companies selected from the Nifty Total Market Index based on the eligibility criteria set by the NSE Indices Limited. The Nifty NBFC Index is reconstituted semi-annually and rebalanced quarterly.

The Nifty NBFC Index can be used to benchmark fund portfolios and launch exchange-traded funds (ETFs), index funds, and other sector-related investment products.

How Does the Nifty NBFC Index Work?

The Nifty NBFC Index tracks the performance of all the Non-Banking Financial Company (NBFC) stocks included in the Nifty Total Market Index. The Index has a base date of April 01, 2005, and a base value of 1000.

The index must have a minimum of 10 stocks, and if the number of eligible stocks is below 10, then the remaining stocks can be selected from the stocks ranked within the top 1000 based on both average daily turnover and average daily full market capitalisation based on the previous six-month period data used for index rebalancing of Nifty Total Market.

The Nifty NBFC Index is managed through a three-tier governance structure comprising the Board of Directors of NSE Indices Limited, the Index Advisory Committee (Equity), and the Index Maintenance Sub-Committee.

Constituents of the Nifty NBFC Index

The following are the 10 most prominent constituents of the Nifty NBFC Index, ranked as per their weight as of May, 2026.

Company Name	Weight (%)
Shriram Finance Ltd.	23.67
Bajaj Finance Ltd.	19.45
Cholamandalam Investment and Finance Company Ltd.	11.79
Muthoot Finance Ltd.	6.42
Sundaram Finance Ltd.	5.16
L&T Finance Ltd.	4.37
Piramal Finance Ltd.	4.15
Mahindra & Mahindra Financial Services Ltd.	3.60
SBI Cards and Payment Services Ltd.	3.35
Manappuram Finance Ltd.	3.20

Nifty NBFC Index Historical Performance

NSE Indices Limited calculated the historical performance of the newly-introduced Nifty NBFC Index based on the historical performance of its constituent stocks and r their respective weight in the index over the years.

As of May 2026, the Nifty NBFC Index delivered a 5-year Total Return of 14.56%, which is significantly higher than the Nifty 50 Index's 9.87%.

The Nifty NBFC Index has a Beta of 1.18 in relation to the Nifty 50, indicating that it is more volatile than the broader market. For example, if the overall market rises or falls by 10%, then the Nifty NBFC Index may rise or fall by 11.8% in the same direction.

Source: NSE Indexogram

The chart above represents the performance of the Nifty NBFC Index. The index experienced a steady and sustained upward trend from 2014 onwards, followed by a sharp correction in 2020 driven by pandemic-induced market panic. Since then, the index has been moving steadily upwards while experiencing moderate to high volatility.

Selection Criteria for the Nifty NBFC Index

The constituent companies included in the Nifty NBFC Index are selected based on the following eligibility criteria.

Stocks included in the Nifty Total Market Index at the time of review are eligible for inclusion in the index.
Stocks belonging to companies within the eligible basic industries shall be included at the time of review.
The weight of each stock in the index is calculated based on free-float market capitalization.
The Nifty NBFC Index is reconstituted semi-annually and rebalanced quarterly.
The weight of individual stocks in the index is capped at 20%.

Benefits of Investing in the Nifty NBFC Index

The following are the benefits of investing in the Nifty NBFC Index.

Diversification

The Nifty NBFC Index provides investors with a way to invest in various leading companies in the NBFC industry instead of focusing on a few stocks.

High Growth Opportunities

Nifty NBFC Index offers great opportunities for growth potential, driven by increased financial inclusion, rising credit demand from the unbanked and undeserved segments, and the expanding microfinance and affordable housing finance sectors.

Innovative Product Offering

The NBFCs are less regulated than banks, which enables them to change according to the market and innovate and customise the products to gain market share. This makes the NBFCs competitive and often outperforms banks.

Financial Inclusion

The goal of NBFCs is to finance those individuals who are not traditionally financed by banks or any other financial institutions. They cater to the needs of underserved sectors of the economy like small businesses and farmers.

Risks of Investing in the Nifty NBFC Index

The following are the risks associated with investing in the Nifty NBFC Index.

Sector Concentration

Since the Nifty NBFC Index consists of only NBFCs, investing in the index could lead to sector concentration risk. If the NBFC sector faces a downturn, the index may fall, adversely impacting your investments.

Regulatory Dependence

Although NBFCs are not as strictly regulated as banks, they are under the oversight of the Reserve Bank of India (RBI). Any unfavourable changes in compliance requirements, regulatory guidelines, or capital adequacy norms can negatively impact NBFCs.

Asset Quality Risk

Non-Performing Assets (NPAs) are the main concern for many banks and NBFCs. When the borrower fails to repay the loan, the loan, which is an asset for the NBFCs, becomes an NPA. If an NBFC has too many NPAs, it may shrink the company’s profit margins and lending capacity.

Unfavourable Change in Interest Rate

Unlike banks, NBFCs do not offer current or savings accounts to collect money and then lend it to borrowers. To lend to borrowers, they raise money by borrowing from banks, issuing bonds, commercial paper, and raising capital from private equity.

Any changes in interest rates may significantly impact the NBFCs' lending capacity and profit margins, affecting their stock performance.

The Nifty NBFC Index is a sectoral index that tracks the performance of top NBFCs included in the Nifty Total Market Index. These stocks are selected based on the eligibility criteria set by NSE Indices Limited, and their weights are calculated based on the free-float market capitalisation.

Before investing, investors must understand the benefits and risks associated with the Nifty NBFC Index to make smart investment decisions.

FAQs

What is the Nifty NBFC Index?

The Nifty NBFC Index is a sectoral index that aims to measure the performance of the top companies' stocks belonging to the NBFC sector included in the Nifty Total Market Index.

When was the Nifty NBFC Index launched?

The Nifty NBFC Index was launched by NSE Indices Ltd. on June 17, 2026.

How are stocks selected for the Nifty NBFC Index?

The stocks are selected for the Nifty NBFC Index from the Nifty Total Market Index based on the eligibility criteria set by NSE Indices Ltd.

When is the Nifty NBFC Index reconstituted and rebalanced?

The Nifty NBFC Index is reconstituted semi-annually and rebalanced quarterly by NSE Indices Ltd.

About Author

Mariyam Sara

Sub-Editor

holds an MBA in Finance and is a true Finance Fanatic. She writes extensively on all things finance whether it’s stock trading, personal finance, or insurance, chances are she’s covered it. When she’s not writing, she’s busy pursuing NISM certifications, experimenting with new baking recipes.