The S&P CNX Nifty Index
Futures
The NSE Nifty futures contract is a forward contract, which is traded on the National Stock Exchange(NSE) on June 12, 2000. The index futures contracts are based on the popular market benchmark S&P CNX Nifty index.
Contract Specifications
Security descriptor
The security descriptor for the S&P CNX Nifty futures contracts is:
Market type : N
Instrument Type : FUTIDX
Underlying : NIFTY
Expiry date : Date of contract expiry
Instrument type represents the instrument i.e. Futures on Index.
Underlying symbol denotes the underlying index which is S&P CNX Nifty
Expiry date identifies the date of expiry of the contract
Underlying Instrument
The underlying index is S&P CNX NIFTY.
Trading cycle
S&P CNX Nifty futures contracts have a maximum of 3-month trading cycle - the near month (one), the next month (two) and the far month (three). A new contract is introduced on the trading day following the expiry of the near month contract. The new contract will be introduced for a three month duration. This way, at any point in time, there will be 3 contracts available for trading in the market i.e., one near month, one mid month and one far month duration respectively.
Expiry day
S&P CNX Nifty futures contracts expire on the last Thursday of the expiry month. If the last Thursday is a trading holiday, the contracts expire on the previous trading day.
Trading Parameters
Contract size
The permitted lot size of S&P CNX Nifty futures contracts is 200 and multiples thereof.
Price steps
The price step in respect of S&P CNX Nifty futures contracts is Re.0.05.
Base Prices
Base price of S&P CNX Nifty futures contracts on the first day of trading would be theoretical futures price.. The base price of the contracts on subsequent trading days would be the daily settlement price of the futures contracts.
Price bands
There are no day minimum/maximum price ranges applicable for S&P CNX Nifty futures contracts. However, in order to prevent erroneous order entry by trading members, operating ranges are kept at + 10 %. In respect of orders which have come under price freeze, members would be required to confirm to the Exchange that there is no inadvertent error in the order entry and that the order is genuine. On such confirmation the Exchange may approve such order.
Quantity freeze
Quantity Freeze for S&P CNX Nifty futures contracts would be 20,000 units or greater. In respect of orders which have come under quantity freeze, members would be required to confirm to the Exchange that there is no inadvertent error in the order entry and that the order is genuine. On such confirmation, the Exchange may approve such order. However, in exceptional cases, the Exchange may, at its discretion, not allow the orders that have come under quantity freeze for execution for any reason whatsoever including non-availability of turnover / exposure limits
Order type/Order book/Order attribute
· Regular lot order
· Stop loss order
· Immediate or cancel
· Good till day
· Good till cancelled*
· Good till date
· Spread order
*Good Till Cancelled (GTC) orders are cancelled at the end of the period of 7 calendar days from the date of entering an order.
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The S&P CNX NSE Nifty 50 Index
S&P CNX NSE Nifty 50 Index is a well diversified 50 stock index accounting for 23 sectors of the economy. The total traded value of all Nifty stocks is approximately 70% of the traded value of all stocks on the NSE. Nifty stocks represent about 60% of the total market capitalisation.
Why Trade the NSE Nifty Index?
You can trade the 'entire stock market' instead of individual securities.
Index Futures are:
- highly liquid
- large intra-day price swings
- high leverage
- low initial capital requirement
- lower risk than buying and holding stocks
- just as easy to trade the short side as the long side
- only have to study one index instead of 100's of stocks
Index futures are settled in cash and therefore all problems related to bad delivery, forged, fake certificates, etc can be avoided.
Since the index consists of many securities (50 securities) it is very difficult to manipulate the index.
You are required to pay a small fraction of the value of the total contract as margins. This means that trading in Stock Index Futures is a leveraged activity since the investor is able to control the total value of the contract with a relatively small amount of margin.
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