The National Stock Exchange (NSE) on Wednesday launched the Nifty Next 50 index derivatives contract, which received a positive response from market participants.
The National Stock Exchange (NSE) said in a statement that more than 375 trading members from across the country participated in index derivatives.
The volume of futures contracts traded on the first day was 1,223 worth Rs 78.16 crore, while the volume of option contracts was 1,724 and the premium was Rs 155 crore, it added.
The trading members involved in the first trade execution include East India Securities Limited and Samco Securities Limited.
The Nifty Next 50 index represents large-cap stocks outside the Nifty 50 index.
The stock segment of the Nifty Next 50 is a potential contender for inclusion in the list of 50 stocks of the coveted Nifty 50 index, subject to fulfilling certain parameters in the index system.
“The derivative product is unique in that the underlying index has no overlapping elements with other broad market capitalization-based indices for which derivatives are offered on the NSE With interest from players outside the top 50 stocks, the index will provide additional risk management. tools,” said Sriram Krishnan, Chief Business Development Officer, NSE.
The financial services industry has the highest weighting in the index, accounting for 23.76%, followed by the capital goods industry (as 11.91%) and the consumer services industry (accounting for 11.57%).
Nifty Next 50 index futures and options contracts are traded on a three-monthly consecutive contract basis. The derivative is cash settled and has an expiry date of the last Friday of the expiry month.
The exchange has waived trading fees for Nifty Next 50 index derivatives till October 2024.
As of March 29, 2024, the Nifty Next 50 index constituent stocks had a market capitalization of Rs 70 trillion, which is about 18% of the total market capitalization of NSE-listed stocks. Average daily total turnover of index constituents was Rs 9,560 crore. Accounting for around 12% of spot market volume 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 derivative 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.)
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