
Ahead of the launch of futures and options (F&O) contracts on Nifty Next 50 index, NSE on Tuesday said it would waive transaction charges on the index derivatives between April 24 and October 31. NSE would be launching F&O contracts on Nifty Next 50 index on April 24, with contract size or the lot size being set at 10.
The fresh announcement has been made to encourage active participants in futures and options contracts on Nifty Next 50 index. "It has been decided that no transaction charges will be levied on the trades done in futures and options contracts on Nifty Next 50 index (NIFTYNXT50) in Future & Options segment from April 24, 2024 (product launch date) till October 31, 2024," NSE said.
Earlier, NSE said, the F&O trading cycle for Nifty Next 50 index would be three serial monthly contracts. The expiry date will be the last Friday of the expiry month. If Friday is a trading holiday, then the expiry day would be the previous trading day. Quantity freeze has been fixed at 600 contracts.
The Nifty Next 50 index represents 50 companies from Nifty 100 after excluding the Nifty 50 companies. At the end of March, financial services sector accounted for 23.76 per cent of the index weight, followed by capital goods sector with 11.91 per ecnt and consumer services with 11.57 per cent.
Nifty Next 50 was introduced on January 1, 1997, with base date and base value being November 03, 1996, and 1000 respectively. Over the years, the index methodology has undergone revision. The index computation methodology was revised to free float market capitalisation weighted method from May 4, 2009.
Subsequently, weight capping was introduced for constituent stocks on which derivatives were not available. This was revised in 2023 to cumulative weight of non-F&O stocks capped at 10% and non-F&O stocks in the index are individually capped at 4.5 per cent on quarterly rebalance dates.
The Nifty Next 50 index has a 71 per cent correlation and a Beta value of 0.95 with the Nifty 50 Index. It has a correlation of 90 per cent with Nifty Midcap 150 index in financial year 2024.
In recent years, NSE introduced derivatives on Nifty Midcap Select index in January 2022 and derivatives on Nifty Financial Services index in January 2020 in the equity derivatives segment and multiple products in commodity derivatives segment.