The National Stock Exchange of India has received approval from market regulator Securities Exchange Board of India (SEBI) to launch derivatives on the Nifty Midcap Select Index. The Exchange will launch the index derivatives from January 24.
Nifty Midcap Select index aims to track the performance of focused portfolio of 25 stocks within the Nifty Midcap 150 index. All the index constituent stocks are individually available in derivatives. The weight of the stocks is based on free-float market capitalisation methodology
NSE will offer futures and options with trading cycle of 7 weekly expiration contracts (excluding the monthly expiration contract) and 3 serial monthly expiration contracts. Index options will be European style with strike interval of 50 and strike scheme of 30–1–30 (OTM-ATM-ITM).
Vikram Limaye, MD & CEO, NSE, said: “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% of market capitalization. The launch of derivatives on Nifty Midcap Select index will provide participants an additional hedging tool to manage their portfolio risk effectively”.