NSE to launch derivatives on Nifty Next 50 Index starting April 24

The cash-settled derivatives contracts will expire on last Friday of expiry month

The National Stock Exchange (NSE) announced on Thursday that it will launch derivatives contracts for the Nifty Next 50 index from April 24 following approval from the Securities and Exchange Board of India (Sebi), amid rising competitive pressure from rival BSE.

The cash-settled derivatives contracts will expire on the last Friday of the expiry month, it said.

The Nifty Next 50, also known as Junior Nifty, becomes the fifth index to be added to the futures and options (F&O) space. After relaunching the Sensex and Bankex derivatives contracts, the exchange has steadily been gaining market share and acceptance from wider market participants. 

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Currently, F&O contracts are traded on the Nifty 50, Nifty Bank, Nifty Financial Services Index, and Nifty Midcap Select indices. However, the Nifty and the Nifty Bank account for a majority of the traded volumes. 

The Nifty Next 50 index consists of 50 companies from the Nifty 100, excluding the ones on the Nifty 50 index. Making it to the Next 50 index is seen as a precursor to entering the sought-after and widely-tracked Nifty 50 index. 

Just like the Nifty 50 index, the Next 50 index has the highest weighting towards the financial services sector at 23.76 per cent, followed by capital goods and consumer services at 11.91 per cent and 11.57 per cent, respectively.

“The market capitalisation of index constituents stands at Rs 70 trillion representing about 18 per cent of the total market capital of the stocks listed on NSE as of March 29, 2024. The aggregate daily average turnover of index constituents stood at Rs 9,560 crore, accounting for around 12 per cent of cash market turnover in FY24,” NSE said.

Recently, NSE tweaked the lot sizes for its index derivatives and stocks to lower the ticket size. The total turnover for the index derivatives on NSE stood at Rs 3.77 trillion in April, so far.