NSE to launch derivatives on mid-cap stocks index from Jan 24

Leading stock exchange NSE on Monday said it will launch derivatives on the Nifty Midcap Select Index from January 24.

The exchange announced that it has secured approval from market regulator Securities Exchange Board of India (Sebi) to launch derivatives on the index.

Nifty Midcap Select Index aims to track the performance of a focused portfolio of 25 stocks within the Nifty Midcap 150 index, NSE said in a statement.

All the index constituent stocks are individually available in derivatives and the weight of the stocks is based on free-float market capitalisation methodology.

The National Stock Exchange (NSE) will offer futures and options with trading cycle of seven weekly expiration contracts (excluding the monthly expiration contract) and three serial monthly expiration contracts.

"The current availability of index derivatives on the exchange is largely focused on either the large cap stocks or sector specific stocks. The midcap stocks account for around 17 per cent of market capitalization," Vikram Limaye, MD and CEO, NSE said.

The launch of derivatives on Nifty Midcap Select Index will provide participants an additional hedging tool to manage their portfolio risk effectively, he added.

The midcap segment has come into focus during the recent market rally with improved participation levels from across investor classes and consequent liquidity.

Nifty Midcap Select Index has delivered returns of 39 per cent in the last 1 year and 19 per cent annualised returns in the last 5 years ending December 2021.