National Commodity and Derivatives Exchange (NCDEX) on Wednesday said it will launch futures contracts on NCDEX Agridex, which will be available for trading from next week.
The NCDEX Agridex futures contracts expiring in the months of June 2020, July 2020, September 2020 and December 2020 will be available for trading from May 26, NCDEX said in a statement.
The 10 agri-commodities which will be traded on Agridex include soya bean, guar seed, castor seed, channa, coriander, cotton seed oil cake, guar gum, jeera, RM seed and soya oil.
Agriculture is a key pillar of the Indian economy and contributes significantly to employment and economic growth. We have always played an important role in providing risk management tools for the Indian agricultural value chain, said NCDEX MD and CEO Vijay Kumar.
The introduction of Agridex futures is another step in the same direction, he said, adding that these contracts will provide investors one more tool for trading and risk management at a composite level.
Agridex is a return-based index comprising 10 liquid commodities traded on NCDEX with commodity and sector-wise floors and caps and no single commodity or sector dominating the index.
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It has very low correlation with other asset classes and indices; and to ensure diversification, no group of related commodities may constitute more than 40 per cent of the total weightage in the index, NCDEX said.
The rollover will be done on the first three days of the expiry month and the index would be rebalanced annually on the first business day of April.
A floor and a cap is enforced upon the weights of each commodity and sector-wise capping is done based on aggregated weights of each sector.
Futures on Agridex are an important addition to the agricultural derivative products on NCDEX, and the first tradeable commodity index based on Indian domestic prices.
Since Agridex futures contracts provide a diversified cash settled instrument, it will help in widening participation on the Exchange from both institutional and retail investors, NCDEX Head - Business, Kapil Dev added.
NCDEX has partnered with NSE Indices to maintain and disseminate real-time NCDEX Agridex values.