Most of the people think that stocks rise only because of raise in market, but actually market raises only when stock raises. Nifty and Banknifty is an index in which some stocks are combined and made in certain weightage given to each stock. When the stock moves up according to that weightage ,then it shows index is rising and if stock moves down then it shows index is falls down.
In some cases, many stocks in Nifty will fall down that day but still Nifty sustains and will be upwards because of some heavy weight stocks in Nifty index whose weightage is more. So can you buy Nifty and Banknifty? well you cant because its just a number. However what you can buy is Futures and options contracts of Nifty and Banknifty. SInce we cant trade nifty , Exchanges made a contract who price will rise and fall as Nifty rises and falls.
Nifty is also called NIFTY 50 is the market index consisting of 50 well-established and financially sound companies listed on National Stock Exchange of India (NSE).
The base year is taken as 1995 and the base value is set to 1000. Nifty is calculated using 50 large stocks which are actively traded on the NSE. The 50 companies are selected on the basis of the free float . Here, the 50 top stocks are selected from different 24 sectors. Nifty is owned and managed by India Index Services and Products (IISL). Since inception in 1995, Nifty has given a return of 11.13% CAGR (till April 30, 2018).
The Bank Nifty is the bank index which compromises 12 most liquid and large capitalized banking stocks which trade on National Stock Exchange (NSE). Bank Nifty first introduced in the year 2000 to provide a benchmark to investors and market intermediaries to capture the capital market performance of Indian banks.
HDFC Bank, State Bank of India, Kotak Mahindra Bank, IndusInd Bank, ICICI Bank, Axis Bank, Bank of Baroda, Punjab National Bank, Federal Bank, and IDFC Bank are the 12 most liquid banking stocks that part of Bank Nifty Index.