Financial Daily from THE HINDU group of publications
Saturday, Jun 11, 2005
Financial Daily from THE HINDU group of publications Saturday, Jun 11, 2005 |
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Markets
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Stock Exchanges NSE to introduce Bank Index in F&O list from Monday Our Bureau
Mumbai , June 10 THE National Stock Exchange (NSE) has decided to start trading in derivatives from Monday on its recently launched CNX Bank Index. The exchange said that keeping in view the need to provide investors with more tradeable indices, trading in the CNX Bank Index (Bank Nifty) futures and options would start from June 13. The Bank Nifty contracts are based on the CNX Bank Index, which is a 12-stock index. The Bank Nifty contracts will be cash settled, with three consecutive month contracts being available. The contracts will expire on the last Thursday of the respective months. The options contracts will be European style and the lot size of each Bank Nifty futures and options contract will be 100. The NSE said that the Bank Index represents about 79 per cent of the total market capitalisation of the banking sector stocks listed on the exchange. The index is a market capitalisation weighted index with the base year of the index being January 1, 2000 and the base value being 1,000. The NSE said that the Bank Nifty contracts would go a long way in addressing the need of retail and institutional investors to hedge their exposure to bank stocks. Currently, FIIs have a large exposure to Indian bank stocks, with some of the stocks that form part of the CNX Bank index already having reached the permissible FII limits. For FIIs, Bank Nifty derivatives contracts would be the ideal hedging instrument, the exchange said. Moreover, all the 12 securities comprising the CNX Bank Index are available in the futures and options segment of the NSE as single stock derivatives. These 12 stocks have a very high correlation with the CNX Bank index. "Investors can create investing and arbitrage strategies to benefit from the high correlation between the single stocks and the Bank Nifty contracts," it said.
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