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NSE introduces F&O contracts on Nifty Financial Services Index (FINNIFTY)

NSE has introduced F&O contracts including weekly options on Nifty Financial Services index –FINNIFTY. The Nifty Financial Services Index tracks the performance of Indian financial services companies which includes banks, financial institutions, housing finance, insurance companies and other financial services companies. The index comprises a maximum of 20 stocks and a stock’s weight is based on its free float market capitalization.
In order to encourage active participation in Futures and Options contracts on Nifty Financial Services Index, NSE has declared that exchange transaction charge will not be charged for FINNIFTY for the first six months. Trading in these contracts will start from Monday, January 11, 2021.
The Nifty Financial Services Index allows investors to get diversified exposure with 63.1% exposure to Banks, 18.5% exposure to HFCs, 8.1% exposure to NBFCs and 8.0% exposure to Insurance companies, which provides a more diversified exposure to the Indian financial services sector as compared to Nifty Bank Index. Since inception on January 1, 2004, the Nifty Financial Services Index has returned 18.7% p.a. return vs 13.9% p.a. return of the Nifty 50 Index and 16.9% p.a. return of the Nifty Bank index. The Nifty Financial Services Index has significantly outperformed broader market indices and Nifty Bank over the long term.

Nifty Financial Services index-Constituent Details:

Symbol company industry weight %
HDFC bank HDFC BANK LTD BANKS 27.13
HDFC HOUSING DEVELOPMENT FINANCE CORPORATION LTD. HOUSING FINANCE 17.51
ICICIBANK ICICI BANK LTD. BANKS 14.14
KOTAKBANK KOTAK MAHINDRA BANK LTD. BANKS 12.1
AXISBANK AXIS BANK LTD. BANKS 6.46
BAJFINANCE BAJAJ FINANCE LTD. NBFC 5.64
SBIN SBI banks 4.06
HDFCLIFE HDFC LIFE INSURANCE COMPANY LTD. INSURANCE 2.21
BAJAJFINSV BAJAJ FINSERV LTD. INSURANCE 2.29
SBILIFE SBI LIFE INSURANCE COMPANY LTD. INSURANCE 1.43
ICICIGI ICICI LOMBARD GENERAL INSURANCE COMPANY LTD. INSURANCE 1.37
ICICIPRULI ICICI PRUDENTIAL LIFE INSURANCE COMPANY LTD. INSURANCE INSURANCE 0.74
PEL PIRAMAL ENTERPRISES LTD. OTHER FINANCIAL SERVICES 0.68
BAJAJHLDNG BAJAJ HOLDINGS & INVESTMENT LTD. NBFC 0.66
HDFCAMC HDFC ASSET MANAGEMENT COMPANY LTD. OTHER FINANCIAL SERVICES 0.59
SRTRANSFIN SHRIRAM TRANSPORT FINANCE CO. LTD. NBFC 0.87
PFC POWER FINANCE CORPORATION LTD. FINANCIAL INSTITUTION 0.54
CHOLAFIN CHOLAMANDALAM INVESTMENT AND FINANCE COMPANY LTD. NBFC 0.66
RECLTD REC LTD. FINANCIAL INSTITUTION 0.49
M&MFIN Mahindra and Mahindra Financial Service NBFC 0.44

Contract Specifications:

Particulars Futures Options
Symbol FINNIFTY FINNIFTY
Instrument FUTIDX OPTIDX
Tick Size (Price Steps) Re 0.05 Re 0.05
Contract Size (Lot Size) 40 40
Trading Cycle 7 serial weekly excluding the monthly expiry and 3 serial monthly Contracts.
Expiry Day Last Thursday of the expiry month for the monthly contracts and Thursday of the expiring week for weekly expiry contracts excluding the expiry week of monthly contract. If the Thursday is a trading holiday, then the expiry day is the previous trading day.
Strike Scheme - 30-1-30
Strike Interval - 100
Option Type - Call European (CE) and Put European (PE)
Settlement Cash Settled Cash Settled
Daily Settlement Price Last half hour VWAP of futures. In the absence of trading in the last half an hour, the theoretical price would be considered. -
Final Settlement Price Index closing value on the last trading day Index closing value on the last trading day
Quantity Freeze 5001 5001
Price Band Operating range of 10% of the base price A contract specific price range based on its delta value is computed and updated on a daily basis
Spread Contracts M1 M2 M1 M3 M2 M3 W1 W2 W1 W3 W1 W4 W2 W3 W2 W4 W2 W5 W3 W4 W3 W5 W3 W6 -

Check out following reports of NSE for more details on these contracts:

1. Derivatives on the Nifty Financial Services Index
2. Nifty Financial Services Index
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