Diversification means spreading your money across different companies AND different sectors AND different asset classes. It reduces the pain of any single bad decision.
Owning 5 banks is not diversification — it's a bet on one sector. Owning 1 bank, 1 IT company, 1 FMCG, 1 pharma and 1 auto is real spread.
For a beginner portfolio, 8–15 stocks across 4–6 sectors is a good target. Fewer than 5 is concentrated; more than 25 usually just tracks the index at higher cost.
Diversification cannot eliminate market risk — in a big crash almost everything falls. It only protects you from company-specific and sector-specific accidents.