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FINNIFTY derivatives (Nifty Financial Services Index derivatives) on NSE witnessed trading activity of more than 1 crore contracts today for the first time since its launch. The Exchange had launched index derivatives on the Nifty Financial Services Index on January 11, 2021. Today, exchange witnessed trading of 1.07 crore contracts with premium turnover of Rs. 869.21 crores in options and 347 contracts worth Rs. 24.77 crores in futures.
FINNIFTY has seen increase in participation and liquidity post change in the expiry day to ‘Tuesday’ from the ‘Thursday’ expiry from October 2021. The daily average number of contracts traded has increased from 4,553 contracts in October 2021 to 25.12 lakhs contracts in August 2022 till date.
The financial services sector assumes significance as the sector accounts for 30.21% in the Nifty 500 index. The Nifty Financial Services Index comprises of 20 stocks and is designed to reflect the behaviour and performance of the Indian financial market which includes banks, financial institutions, housing finance, insurance companies and other financial services companies.
A recent investment data of Foreign Portfolio Investors (FPIs) indicates, around 30% of new investment flows were channelized into the financial services sector. The sector accounted for 31.9% of the assets under the custody of FPIs. Further, many asset management companies have mutual fund schemes on the financial sector theme.
Exchange offers 3 monthly futures contracts and options in 7 serial weekly excluding the monthly expiry & 3 serial monthly contracts. The derivatives are cash settled with expiry day being the last Tuesday of the expiry month for the monthly contracts and Tuesday of the expiring week for weekly expiry contracts. The option contracts are European styled Call Option (CE) and Put Option (PE).
Earlier this year, Exchange had launched derivatives on another index – Nifty Midcap Select Index. The index tracks performance of 25 mid-capitalised stocks within the Nifty Midcap 150 index. The MIDCPNIFTY (Derivatives on the Nifty Midcap Select Index) also offers cash settled weekly & monthly futures and options contracts with ‘Tuesday’ as the expiry day.
