NSE Waives Junior Nifty Next 50 F&O Transaction Fees for 6 Months

The National Stock Exchange of India (NSE) announced it will remove transaction charges for trading in futures and options (F&O) contracts on the Nifty Next 50 index for the first six months until 31 October, 2024. This initiative, effective from the launch date of 24 April, 2024, aims to encourage participation in the newly introduced Nifty Next 50 derivatives market.

In a circular released on April 23, the NSE stated, "In order 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."

This announcement follows closely after NSE's recent introduction of trading in F&O contracts on the Nifty Next 50 Index, which will be effective from April 24, 2024. This new offering fills the gap between the well-established Nifty 50, representing India's top 50 large-cap companies, and the Nifty Midcap Select index, which tracks mid-sized companies. The newly-introduced cash-settled derivatives contracts will expire on the last Friday of the expiry month, as per NSE's announcement.

According to NSE's Chief Business Development Officer, Sriram Krishnan, the Nifty Next 50 derivatives will complement the existing product suite. The Nifty Next 50 index has a 71% correlation and a Beta value of 0.95 with the Nifty 50 Index. It has a correlation of 90% with Nifty Midcap 150 index in financial year 2024.

The Nifty Next 50 index is constructed by selecting 50 companies from the Nifty 100, excluding those already in the Nifty 50. As of March 2024, the leading sectors represented in the index were financial services (23.76% weight), capital goods (11.91% weight), and consumer services (11.57% weight).

As of March 2024, the index's top sector representation came from the financial services sector, with a weight of 23.76%, followed by the capital goods sector at 11.91% and consumer services at 11.57%. The index was introduced on January 1, 1997, with the base date and base value being November 3, 1996, and 1000, respectively.

The market capitalization of index constituents stands at ₹70 lakh crore, representing about 18% of the total market capitalization of the stocks listed on the NSE as of March 29, 2024. The aggregate daily average turnover of index constituents stood at ₹9,560 crore, accounting for around 12% of the cash market turnover in FY24.