NSE to Launch Futures and Options Contracts on Nifty Next 50 Index

The National Stock Exchange of India (NSE) is introducing new Futures and Options (F&O) contracts based on the Nifty Next 50 index. This is exciting news for traders looking to gain exposure to this mid-cap focused index.

What is Nifty Next 50?

The Nifty Next 50 is an index comprising 50 stocks from various vital sectors of the economy. It serves to gauge the performance of the next 50 large-cap companies after the top 50 in the NIFTY 100, based on free-float market capitalization. As of December 2018, it represents roughly 10% of the total free-float market capitalization of stocks listed on the NSE. Additionally, the index's constituents contribute to about 13% of the six-month average daily turnover of all stocks listed on the NSE.

When will the contracts be available?

Starting April 24, 2024, you can trade in new Futures and Options (F&O) contracts. The exchange will initially offer three serial monthly contracts that end in May, June, and July 2024. These contracts will expire on the last Friday of each month. If the last Friday falls on a holiday, the expiry day will be the previous day.

Understanding the NIFTY Next 50 Portfolio: Top 10 Stocks

As of December 31, 2018, the top 10 stocks in the NIFTY Next 50 made up about 35.4% of the portfolio. Britannia Industries Ltd. had the highest weight at 5.47%, while United Spirits Ltd. had the lowest at 2.82%. Britannia Industries Ltd. was the largest stock with a market cap of INR 74,869 Crores, while The New India Assurance Company Ltd. was the smallest with a market cap of INR 29,623 Crores. This diversity offers investors a balanced mix of industries and market capitalizations for effective diversification.

What are the contract specifications?

• Contract Symbol: NIFTYNXT50
• Instrument Type: FUTIDX (Futures) and OPTIDX (Options)
• Tick Size: Re 0.05
• Lot Size: 10 (for both futures and options)
• Settlement: Cash settled 

Key Points to Remember

• Contract details will be reflected in relevant files available on the NSE Extranet by April 23rd, 2024. Members are advised to update their trading applications accordingly.
• Options contracts will include Calls (CE) and Puts (PE).
• The exchange will disseminate further details regarding the settlement procedure.

In Conclusion

The launch of F&O contracts on the Nifty Next 50 index lets more traders join in on the growth of mid-sized companies in India. These contracts have a lot size of 10, making them easier for more people to trade. The Nifty Next 50 includes large companies that could soon join the Nifty 50 index. It covers 14 different sectors, with the top 5 sectors making up 76% of the index. Over the years, the Nifty Next 50 has consistently performed better than the Nifty 50, making it an attractive investment option.