Nifty Junior, CNX100 fail to rev F&O mart

A month after the Nifty Junior and CNX100 indices were included in the futures and options (F&O) segment, trading is yet to gather steam, perplexing traders and analysts, given that both the indices capture the performance of some of the most liquid and well capitalized securities.

The total trading volumes in the Nifty Junior and CNX100 indices were Rs 13 crore and Rs 1.16 crore, respectively, on Wednesday, which is in stark contrast to trading volumes in Nifty futures, where the volumes clock an average of over Rs 6,000 crore on a daily basis.

Volumes in index futures of the BankNifty and the CNX IT were higher than the two new F&O entrants. The BankNifty had a turnover of Rs 139.31 crore while the CNX IT recorded a turnover of Rs 14.51 crore on Wednesday.

Says Viral Doshi, head of derivatives with Networth Stock Broking: "Currently, the scenario looks somewhat bleak for the Nifty Junior and CNX100 indices. People have not been able to see the value in these indices. There is a lack of awareness on the part of retail investors. Moreover, FIIs (foreign institutional investors) and mutual fund houses are also not showing interest in them".

To promote the new products, the National Stock Exchange (NSE) had waived transaction the charges on a turnover of above Rs 10 crore in the Nifty Junior and above Rs 10 crore in the CNX100 per trading member per day in the futures sub-segment.

Of the two, the Nifty Junior has proved to be more popular than the CNX100. While the CNX100 comprises the top 100 liquid stocks in the country, the Nifty Junior gives investors an opportunity to invest in smaller and less liquid stocks. Currently, there is no other mid-cap index for futures & options.

Analysts have also failed to comprehend the lack of trading in the two indices. "Leave aside the Nifty Junior. We had thought that the CNX100 would pick up, but it has not," said Sunil Jain, a derivatives analyst from Edelweiss Securities.

Adds Doshi: "The Nifty is attracting big volumes because most of the funds trade in the index. But it will take some time for the Nifty Junior and CNX100 contracts to be as popular as the Nifty. The ideal time to go for trading in these indices is when there is a diversion between small cap and mid cap movements. These indices need to catch the fancy of FIIs and fund houses".