Hi Rebeck10…I’m assuming you have used a theoretical fair value estimate to arrive at this conclusion of Bank Nifty being mispriced…
Few things that I can think of…
-
Your interest rate estimate may be different
-
There could be effect of dividend which you may have missed
-
Assumption on time rule convention such as - actual/actual, actual/360, 30/360 etc could vary between the market and you
Now assuming you have factored in all these variables correctly, a 50 point under pricing on Bank Nifty works out to a third of a percent, which practically is negligible when you consider liquidity, transaction costs etc.