In the market term, derivatives refer to financial contracts between two or more parties whose value is derived from an underlying asset or benchmark (Photo: Bloomberg)
2 minutes of reading Latest version: April 23, 2024 | 2:09 p.m IST
The National Stock Exchange (NSE) will introduce derivatives contracts on the Nifty Next 50 index from Wednesday.
This follows approval from market regulator Securities and Exchange Board of India (SEBI).
Nifty Next 50 Index represents 50 companies in Nifty 100 excluding Nifty 50 companies.
Under the derivative contract, the exchange will offer three consecutive monthly index futures and index option contract cycles. Cash-settled derivatives expire on the last Friday of the month in which the contract expires
The introduction of derivatives on the Nifty Next 50 index will complement the existing suite of index derivative products. Sriram Krishnan, NSE’s chief business development officer, said at the end of the week that the Nifty Next 50 index will represent the gap between the Nifty 50 index, which includes top large-cap and liquid stocks, and the Nifty Midcap Select index, which includes top large-cap and liquid stocks. There are liquid mid-cap stocks.
As of March 2024, the highest industry representation in the Nifty Next 50 index is financial services with a weightage of 23.76%, followed by capital goods industries with a weightage of 11.91% and consumer services with a weightage of 11.57%. The index was launched on January 1, 1997.
The market capitalization of the constituents of the Nifty Next 50 index is Rs 70 trillion, accounting for about 18% of the total market capitalization of stocks listed on the NSE as on March 29, 2024. Average daily turnover of index components was Rs 9,560 and cash market turnover was around 12% in FY2024.
A derivative in market terms refers to a financial contract between two or more parties whose value is derived from an underlying asset or benchmark.
Generally speaking, there are two types of derivatives contracts – futures and options. A futures contract is a legally binding agreement to buy or sell an underlying security at a future date, while an options contract gives the buyer or holder of the contract the right to buy or sell the underlying asset at a predetermined price on or before maturity. for a certain period of time.
(Only the headlines and images in this report may have been reworked by Business Standards staff; the rest of the content was automatically generated from syndicated sources.)
Initial Disclosure: April 23, 2024 | 2:09 p.m IST
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