Hi Sai,
One last point to this is that it's important to understand that when you bundle a number of physical links into a port-channel you do not achieve an interface supporting the total bandwidth of all the bundled links.
For example when you bundle two 1Gbps links, you have a single logical link supporting 2Gbps capacity, but the reality is that you still have two physical links each operating at 1Gbps.
One of the key requirements of the IEEE 802.3ad standard (now IEEE 802.1AX) is that "Frame ordering must be maintained". In order to achieve this all frames associated with a specific "conversation" must use the same physical link.
As an example let's assume we have host H1 connected to switch S1 with a 10GE NIC, host H2 connected to switch S2 with a 10GE NIC, and four physical 1GE links between S1 and S2 configured as a 4GE port-channel.
Because of the strict frame ordering requirement, any single conversation e.g., a file transfer between H1 and H2, is only sent across one of the four links, and so the effective throughput between H1 and H2 would be 1GE. The remaining three links would not be utilised.
If H1 and H2 were to start another conversation, this may be balanced across a different 1GE link and so then the total throughput between the H1 and H2 might be 2GE.
The way traffic is balanced across the physical links of a port-channel is based on a computed hash of a number of different parameters including source/destination MAC address, source/destination IP address and source/destination port. The parameters that may be included within the hash may vary by platform so you'd need to look at this for the platform you're interested in. You can find details for the Nexus 5000 series switches in the Load Balancing Using Port Channels section of the Cisco Nexus 5000 Series NX-OS Software Configuration Guide.
Regards
