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10 Jan 2021, 10:22 PM
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 that covers the top banking, insurance, housing finance, NBFC and other financial services companies. Trading in these contracts will start from Monday 11th, 2021. The underlying index for Finnifty is Nifty financial services Index. Kite charts have historical data from Feb 2015 for the index. In order to promote the contract, NSE has also declared that exchange transaction charge will not be charged for FINNIFTY for the first six months. In addition, all brokerage for trades on FINNIFTY will be waived off for the first month at Zerodha.
Check out this video with Alok Dharia (QC Alpha) and Abid (CEO, Sensibull) talking about FINNIFTY.
If you have any questions about the index, post them here on TradingQ&A.
For all of us trading Banknifty F&O, this index offers an exciting mix extending to the whole BFSI sector and not just banks. FINNIFTY is the first index derivatives with a weekly futures contract along with weekly options. The lot size is 40 and at the current index level of 15000, the contract value is approximately Rs 6lks as compared to Rs 7.5lks of Banknifty.
Index constituents
| Company | Industry | Weight% |
|---|---|---|
| HDFC Bank | Banks | 27.13 |
| HDFC | Housing Finance | 17.51 |
| ICICI | Banks | 14.14 |
| Kotak | Banks | 12.1 |
| Axis | Banks | 6.46 |
| Bajaj Finance | NBFC | 5.64 |
| SBI | Banks | 4.06 |
| Bajaj Finserv | Insurance | 2.29 |
| HDFC Insurance | Insurance | 2.21 |
| SBI Life Insurance | Insurance | 1.43 |
| ICICI Lombard General Insurance | Insurance | 1.37 |
| Shriram Transport Finance | NBFC | 0.87 |
| ICICI Prudential Life Insurance | Insurance | 0.74 |
| Piramal | Other Financial Services | 0.68 |
| Bajaj Holdings & Investments | NBFC | 0.66 |
| Cholamandalam Investment & Finance | NBFC | 0.66 |
| HDFC AMC | Other Financial Services | 0.59 |
| Power Finance Corporation | Financial Institution | 0.54 |
| REC | Financial Institution | 0.49 |
| Mahindra and Mahindra Financial Service | NBFC | 0.44 |
Sectoral representation
| Nifty Financial Services | Nifty 50 | Nifty 500 | Nifty Bank | |
|---|---|---|---|---|
| Banks | 63.1 | 26.5 | 20.3 | 100 |
| Housing Finance Companies | 18.5 | 7.5 | 5.6 | 0 |
| NBFCs | 8.1 | 2.3 | 3 | 0 |
| Insurance Companies | 8 | 2.5 | 2.5 | 0 |
| Other Financial Services | 1.3 | 0 | 1.4 | 0 |
| Financial Institutions | 1.1 | 0 | 0.3 | 0 |
| Total Financial Services Exposure | 100 | 38.7 | 33.2 | 0 |
Nifty Financial Services is a far more diversified index than Bank Nifty.
Risk and return measure comparison of the indices.
| CAGR returns | Annualised Volatility | Return-Risk Ratio | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Period | Financial | Nifty | Nifty | Nifty | Financial | Nifty | Nifty | Nifty | Financial | Nifty | Nifty | Nifty |
| Services | 50 | Bank | 500 | Services | 50 | Bank | 500 | Services | 50 | Bank | 500 | |
| Since Inception | 18.7% | 13.9% | 16.9% | 13.9% | 29.3% | 22.9% | 30.5% | 22.2% | 0.64 | 0.61 | 0.56 | 0.63 |
| 15 years | 16.9% | 12.6% | 14.9% | 12.1% | 29.3% | 22.9% | 30.2% | 22.1% | 0.58 | 0.55 | 0.49 | 0.55 |
| 10 years | 13.3% | 9.9% | 11.1% | 10.0% | 23.6% | 17.5% | 24.9% | 17.0% | 0.57 | 0.56 | 0.45 | 0.59 |
| 7 years | 19.0% | 13.4% | 16.3% | 14.2% | 22.8% | 17.2% | 24.0% | 17.0% | 0.83 | 0.78 | 0.68 | 0.84 |
| 5 years | 17.3% | 13.3% | 13.7% | 12.6% | 23.7% | 18.2% | 24.8% | 17.7% | 0.73 | 0.73 | 0.55 | 0.71 |
| 3 years | 13.6% | 11.2% | 7.3% | 7.8% | 27.8% | 21.1% | 28.9% | 20.3% | 0.49 | 0.53 | 0.25 | 0.38 |
| 1 year | 4.1% | 15.7% | -2.6% | 17.4% | 41.2% | 31.3% | 43.1% | 29.5% | 0.10 | 0.50 | -0.06 | 0.59 |
| 6 months | 43.5% | 36.0% | 46.6% | 36.1% | 24.0% | 15.5% | 27.5% | 15.0% | 1.81 | 2.32 | 1.69 | 2.40 |
| 3 months | 42.3% | 24.2% | 46.0% | 23.0% | 24.2% | 14.4% | 27.1% | 13.8% | 1.75 | 1.67 | 1.70 | 1.67 |
Nifty Financial Services beta and correlations with Nifty 50 Index, Nifty Bank and Nifty 500 Index.
| Beta relative to Nifty Bank | Correlation with Nifty | |||||||
|---|---|---|---|---|---|---|---|---|
| Services | Nifty 50 | Nifty Bank | Nifty 500 | Services | Nifty 50 | Nifty Bank | Nifty 500 | |
| Since Inception | 0.94 | 0.66 | 1 | 0.64 | 0.98 | 0.88 | 1 | 0.88 |
| 15 years | 0.95 | 0.66 | 1 | 0.64 | 0.98 | 0.88 | 1 | 0.88 |
| 10 years | 0.92 | 0.63 | 1 | 0.61 | 0.97 | 0.89 | 1 | 0.89 |
| 7 years | 0.92 | 0.64 | 1 | 0.63 | 0.97 | 0.89 | 1 | 0.88 |
| 5 years | 0.93 | 0.66 | 1 | 0.64 | 0.97 | 0.9 | 1 | 0.89 |
| 3 years | 0.93 | 0.66 | 1 | 0.63 | 0.97 | 0.91 | 1 | 0.9 |
| 1 year | 0.94 | 0.67 | 1 | 0.62 | 0.98 | 0.92 | 1 | 0.91 |
| 6 months | 0.84 | 0.47 | 1 | 0.44 | 0.97 | 0.84 | 1 | 0.81 |
| 3 months | 0.86 | 0.45 | 1 | 0.4 | 0.96 | 0.84 | 1 | 0.79 |
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 | – |
You can start tracking the Nifty Financial Services index on Kite by adding it to the market watch. The index symbol is FINNIFTY.