On Thursday, the National Stock Exchange (NSE) said that starting on April 24, it will offer derivative contracts based on the Nifty Next 50 index. After removing the Nifty 50 firms, the Nifty Next 50 index reflects 50 companies from the Nifty 100.
In a press release, the NSE stated that it "has received approval for derivatives on Nifty Next 50 index from the Securities and Exchange Board of India (Sebi) and will launch these contracts from April 24, 2024" .
Three monthly serial index futures and index options contract cycles will be available on the market. The final Friday of the expiry month will mark the expiration of the cash-settled derivatives contracts.
The current suite of index derivatives products will be enhanced by the addition of derivatives on the Nifty Next 50 index. According to Sriram Krishnan, Chief Business Development Officer of NSE, "the Nifty Next 50 index will represent the space between the Nifty 50 index, which comprises the top large and liquid stocks, and the Nifty Midcap Select index, which comprises the top large and liquid mid-capitalized stocks."
The financial services sector led the index's sector representation as of March 2024, accounting for 23.76 percent of the weight, followed by the capital goods sector (11.91%) and the consumer services sector (11.57%). January 1, 1997, saw the introduction of the index.
As of March 29, 2024, the market capitalization of the stocks that make up the Nifty Next 50 index is Rs 70 trillion, or around 18% of the total market capitalization of all the firms listed on the NSE. In FY24, the total daily average turnover of the index components was Rs 9,560 crore, or around 12% of the turnover of the cash market.
In the past, the exchange debuted several products in the commodities derivatives market in October 2023, as well as derivatives on the Nifty Financial Services index in January 2020, Nifty Midcap Select index in January 2022, and other indexes.
In the language of the market, financial contracts that include two or more parties and draw their value from an underlying asset or benchmark are referred to as derivatives.
Futures and options are the two main categories of derivative contracts. An options contract gives the buyer or holder the right (but not the obligation) to buy or sell the underlying asset at a predetermined price within or at the end of a specified period. A futures contract is a legally binding agreement to buy or sell the underlying security on a future date.
