WHAT IS THE NEW NIFTY MIDCAP SELECT INDEX FOR TRADING IN FUTURES AND OPTIONS?

F&O trading in India has come a long way and now they contribute to around 95% of overall NSE volumes. Volumes have almost doubled in FY 22 compared to FY 21 same time.

Nifty and Bank Nifty accounts for about 33% of NSE volumes in FY22 in Overall Futures and nearly 80% of Options Premium turnover and trading can also be done in 170 stocks.

Index F&O trading offers a varied group of stocks which helps customers to diversify and are preferred due to their easy liquidity. The Nifty Midcap Select Index was launched by NSE on Jan 24 2022 such that investors and traders can join in the Midcap growth story.

Why Midcap?

Over the past two years with the market rally since the disruption caused by Covid, the midcap segment has received active participation across all classes of investor thus leading to improved liquidity. The Nifty Midcap Select Index has delivered good returns at 38.7% in 2021 and 19.04% annualized returns in the last 5 years till Dec 2021. Midcap stocks contribute about 17% of the market capitalization of India

What are the constituents of the Nifty Midcap Select Index?

Stocks which form the part of Nifty Midcap Select Index are given below. Tata Power, SRF, Zee, Voltas, Bharat Electronics account for nearly 30% of the weight of the Index

These stocks are selected from Nifty midcap 150 index based on trading availability, market cap and average daily turnover.

What is the sector wise break up?

Financial Services followed by Automobile, Manufacturing, Power and Chemicals account ~ 53% of the Index

Performance, Relation to Nifty and Volatility of the Nifty Midcap Index

Below table depicts the returns of the index across multiple time frames.

Nifty Midcap index has 0.84 co-relation with Nifty over last 5 years and Beta which is 1.03 in last 5 years. Beta is a measure of a stock's volatility in relation to the overall market.  If a stock moves less than the market, the stock's beta is less than 1.0. High-beta stocks are supposed to be riskier but provide higher return potential; low-beta stocks pose less risk but also lower returns.

Standard deviation, which is the statistical measure of market volatility, measuring how widely prices are dispersed from the average price stands at 22.59 for the Index. If prices trade in a narrow trading range, the standard deviation will return a low value that indicates low volatility. Conversely, if prices swing wildly up and down, then standard deviation returns a high value that indicates high volatility.

How does the fundamental of the new Index Stack up?

Price to earning which is the ratio for valuation that measures its current share price relative to its earning per share (EPS) of the Nifty Midcap select Index stands at 26.8.

Price-to-book value (P/B) which is the ratio of the market value of a company's shares (share price) over its book value of equity stands at 3.21

Dividend yield stands at 0.94.

Lot size, Max order quantity, contract value and Margins

The lot size is 75 with Weekly expiries on Tuesdays.  The contract value quantity freeze for trading in any single order is set to be 5500. Margins will depend upon the Span Based Margining system.

How can you Trade on ICICIdirect in Nifty Midcap Select Index

You can simply login to ICICIdirect and like normal Future and Options trade, enter Stock MIDCPNIFTY in the drop down select Nifty Midcap Index to get started.

Disclaimer: -ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.