Sedate start for new Nifty products

Just five days since its entry into the derivatives segment (futures and options), the Nifty Mid-cap 50 Index is seeing decent volumes as investors move away from index heavyweights and place bets on the fast-growth potential of top-rung mid-cap stocks.

On Thursday, the futures trading volume in the Nifty Mid-cap 50 Index, which tracks the movement of top-50 mid-cap stocks, including Alstom Projects, BEML and Reliance Natural Gas, touched Rs 2.41 crore (110 contracts).

This is higher than the futures' turnover in the CNX 100 Index, where derivatives trading commenced from June 1 this year. 

INDEX FUTURES
Symbol	No of contracts traded	Traded quantity	Total traded in Rs crore	Open interest (Qty) as at end of trading hours
NIFTY	583021	29151050	15990.9	36925300
NFTYMCAP50	110	8250	2.41	27300
JUNIOR	688	17200	17.39	171600
CNX100	7	350	0.19	400
BANKNIFTY	2754	137700	111.79	198850
CNXIT	2357	117850	58.49	181400

Trading in the Nifty Junior Index, which also commenced from June this year, is attracting good volumes. Traded volume in futures of the Nifty Junior Index were Rs 17.39 crore (17,200 contracts) on Thursday.

In comparison, the total traded volume on the CNX 100 futures on Thursday was a mere Rs 19 lakhs (only seven contracts), reflecting a muted response from investors to this new product.

Open interest, which is the measure of liquidity in a particular index, is also quite dismal for the CNX 100 at 400 contracts.

The Nifty Index is by far the most popular derivatives product, clocking a daily volume of over Rs 15,000 crore on the futures segment alone.

Says Siddhartha Bhamre, derivatives analyst at Angel Broking: "There is hardly any liquidity in the CNX 100 Index. Comparatively, the Nifty Mid-cap 50 is doing better. We don't have funds benchmarked to the CNX 100 or the Nifty Junior.

There seems to be no interest from FIIs and hedge funds for these two indices. But mid-caps are seeing renewed buying interest among investors."

He said a majority of the funds were benchmarked against the Nifty or the Bank Nifty indices and that was the reason behind a big turnover in these two contracts. Some portfolio managers also did hedging in these indices, Bhamre said.

The Bank Nifty clocks a daily average of above Rs 100 crore.

To encourage active participation in the new index products, the NSE, which has a monopoly share in the derivatives segment, had waived transaction charges if members delivered big turnovers.

If a member generates a daily average turnover of above Rs 10 crore, the NSE said there would not be any transaction charges on trades done in the Nifty Junior, CNX100 and Nifty Mid-cap 50 in the options sub-segment.

But these seem to have no marketing gimmick and investors do not seem to have taken a fancy to the options segment in these indices. Except for the Nifty options, there is no investor interest virtually any other indices.

While it is still too early for the Nifty Mid-cap 50, the Nifty Junior is proving to be more popular than the CNX 100 among the new entrants. The CNX 100 comprises top-100 liquid stocks in the country and the Nifty Junior gives investors an opportunity to invest in smaller and less liquid stocks.

Sameer Shetye, derivatives analyst at Emkay, said: "There is no liquidity at the CNX 100 and the Nifty Junior. Mid-caps have seen a lot of interest from investors because they have moved from index heavyweights to mid-cap stocks."