The National Stock Exchange (NSE) declared on Thursday that it will launch derivative contracts on the Nifty Next 50 index beginning April 24. The Nifty Next 50 index represents 50 businesses from the Nifty 100, excluding the Nifty 50 businesses. NSE stated in a statement that it has received authorization from the Securities and Exchange Board of India (SEBI) for derivatives on the Nifty Next 50 index and will launch these agreements beginning April 24, 2024.
The exchange will offer three cycles of consecutive monthly index options and index futures contracts. Cash-settled derivative contracts will expire on the last Friday of the expiration month.
“The introduction of derivatives on the Nifty Next 50 index will 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,” Sriram Krishnan, Chief Business Development Officer at NSE, said.
As of March 2024, the financial services sector had the highest representation in the index with 23.76% weighting, followed by the capital goods sector at 11.91% and consumer services at 11.57%. The index was launched on January 1, 1997.
Also read: India Exports Record 48.86 Lakh Tonnes Oilmeal In FY24: SEA
The market capitalization of the Nifty Next 50 index components is Rs 70 trillion, which is approximately 18% of the total market capitalization of equities listed on the NSE as of March 29, 2024. The total daily average turnover of the index constituents is Rs 9,560 crore. About 12% of cash market turnover in FY24.
Earlier, the exchange had launched derivatives on the Nifty Financial Services Index in January 2020, derivatives on the Nifty Midcap Select Index in January 2022, and several products in the commodity derivatives segment in October 2023. In market parlance, derivatives refer to financial contracts between two or more parties. The parties derive their value from an underlying asset or benchmark index.
There are two kinds of derivative contracts – futures and options. A futures contract is a legally binding agreement to purchase or sell an underlying security on a future date. In contrast, an option contract gives the buyer or contract holder the right (but not the obligation) to purchase or sell an underlying asset at a predetermined price within a specified period or on the expiration of the specified period.
(With PTI Inputs)
Also read: GQG Partners’ Increases Stake In Six Adani Group Stocks; Bought Shares Worth 8,300 Crore