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    NSE to launch monthly F&O contracts of junior Nifty from next week

    Synopsis

    NSE introduces Nifty Next 50 F&O contracts to compete with BSE in derivatives market. The index represents top Nifty 100 companies, excluding Nifty 50, with significant sector weightings in financial services, capital goods, and consumer services.

    NSE to launch monthly F&O contracts of junior Nifty from next weekAgencies
    The National Stock Exchange of India (NSE), which is trying to defend its dominance in the derivatives market from rival BSE, on Thurday announced that it will start offering monthly futures and options (F&O) contracts of Nifty Next 50, also known as Junior Nifty.

    NSE said it has got market regulator Sebi’s nod to launch these contracts from April 24, 2024. The exchange will offer 3 serial monthly index futures and index options contract cycle. The cash-settled derivatives contracts will expire on the last Friday of the expiry month.

    “The introduction of derivatives on the Nifty Next 50 index (NIFTYNXT50) will well complement the existing index derivatives product suite. The Nifty Next 50 index will represent the space between the Nifty 50 index comprising the top large & liquid stocks and the Nifty Midcap Select index comprising the top large & liquid mid-capitalised stocks,” NSE Chief Business Development Officer Sriram Krishnan said.

    Also read | Is daily expiry a problem for option traders? BSE CEO Sundararaman Ramamurthy explains

    Besides the more popular ones Nifty and Nifty Bank, NSE also offers derivatives of Nifty Midcap Select and Nifty Financial Services index.

    The Nifty Next 50 index has a 71% correlation and a Beta value of 0.95 with the Nifty50 index. It has a correlation of 90% with the Nifty Midcap 150 index in FY 2024.

    The Nifty Next 50 Index represents 50 companies from Nifty 100 after excluding the Nifty 50 companies. As on March 2024, the index had top sector representation from the financial services sector with 23.76% weight followed by the capital goods sector with 11.91% and consumer services with 11.57%.

    The index was introduced on January 1, 1997, with the base date and base value being November 03, 1996, and 1000 respectively. Over the years, the index methodology has undergone revision. The index computation methodology was revised to Free Float Market Capitalisation weighted method from May 4, 2009. Subsequently, weight capping was introduced for constituent stocks on which derivatives were not available. This was revised in 2023 to the cumulative weight of non-F&O stocks capped at 10% and non-F&O stocks in the index are individually capped at 4.5% on quarterly rebalance dates.

    The market capitalization of index constituents stands at Rs 70 trillion representing about 18% of the total market capital of the stocks listed on NSE as of March 29, 2024. The aggregate daily average turnover of index constituents stood at Rs 9,560 crore accounting for around 12% of cash market turnover in FY24.

    As derivative trading is becoming more popular among retail traders in India, BSE had last year launched F&O contracts of Sensex and Bankex and broken NSE's monopoly.

    A typical trading week begins with the weekly expiry of Sensex and Nifty MidCap Select on Mondays, followed by FinNifty on Tuesday, Nifty Bank on Wednesday, Nifty50 on Thursday and BSE Bankex on Friday.


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    (You can now subscribe to our ETMarkets WhatsApp channel)

    (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2024 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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