NCDEX, formerly the National Commodity & Derivatives Exchange, on Thursday marked its entry into the equity and equity derivatives markets with the launch of two indices, NDEX and FINNDEX.
The move is part of the exchange’s diversification from an agricultural commodities bourse towards a broader market-infrastructure provider.
NDEX is a benchmark comprising 20 large and liquid Indian equities selected from a universe of the top 60 NSE-listed companies.
FINNDEX comprises 15 financial sector stocks, excluding insurance companies, drawn from the top 40 eligible companies.
Stocks are ranked on a composite score that gives 30 per cent weightage each to free-float market capitalisation and average daily traded value, and 20 per cent each to beta and volatility.
Also Read
The methodology seeks to combine company size, trading activity and a stock’s sensitivity to the market.
No single stock will exceed 15 per cent at any rebalancing, a cap the exchange said would improve diversification and reduce single-stock concentration risk.
The indices will be reviewed and rebalanced twice a year, in March and September, with provisions for ad-hoc reconstitution under specified circumstances.
“The roll out of NDEX and FINNDEX is an important milestone in NCDEX’s transition into a multi-segment exchange,” said Vikas Goel, managing director and chief executive officer.
Goel said transparent and well-designed benchmarks become increasingly important as Indian capital markets deepen and attract greater domestic and international participation.
He added that the indices were aimed at supporting informed investment decisions and expanding the range of tools available to market participants.
The exchange has recently also diversified into a mutual fund transaction platform and is set to broaden its footprint with the launch of its equity segment.
The equity segment is expected to receive final approval from the Securities and Exchange Board of India (Sebi) in January.
According to sources, the exchange may launch derivatives on NDEX and FINNDEX after receiving Sebi approval in the second half of the next financial year.