India's biggest stock exchange National Stock Exchange (NSE) on December 27, 2007, has introduced a new contract,
MINIFTY, in with S&P CNX Nifty Index as underlying. The new contract is a small derivatives contract and has a lot size of 20 for fures and options. The main contract NIFTY has lot size of 50. With the value of underlying at about 6250 points the total contract size of MINIFTY can be estimated about 125,000 INR. With the introduction of this contracts NSE, India's biggest derivatives exchange, expects the retail investors' participation to increase significantly. Currently NIFTY futures and options are the highest traded index derivatives in India with an average daily turnover of about INR 20000 crores (200 billion INR). With the introduction of MINIFTY there are arbitrage possibilities between Nifty and mini Nifty derivative contracts.
Nifty 50 is the benchmark index of NSE which captures the Indian stock market movement and is based on 50 highest market capitalization securities.
Thus, the cost of taking a derivative position on the index has reduced from around Rs 3 lakh to a little over Rs 1 lakh.
Bombay Stock Exchange (BSE) has also introduced a mini contract named MSX in the futures segment. The contract is based on BSE's benchmark index SENSEX and has a lot size of 5. The SENSEX is currently at about 20800, making the total contract amount to be just above Rs. 100,000. BSE's main product in the futures segment has a lot size of 25.
Securities and Exchange Board of India (SEBI) has approved the introduction of seven new derivative products for the Indian market. SEBI has put a minimum contract size limit of Rs. 100,000 on the contracts at the time of introduction in the market.
While the Mutual Funds started selling in the initial days of the previous week, they started pumping in the money during the fall of the stocks. FIIs on the other hand were about neutral in the week before but they suddenly started selling off heavily each day and even on last few days of the week when the sensex gained significantly, FIIs were net sellers to the extent of more than 1000 crores of rupees. Though the last day selling was very less compared to previous three days in which they sold about 2500 crores worth of stocks each day.
Posts
