New Delhi: Stock Market investors are set to get a new facility. The Bombay Stock Exchange (BSE) has got the green signal from market regulator Securities and Exchange Board of India (SEBI) to start derivatives on a new index. The name of the new index will be BSE Focused Midcap Index. The introduction of the new index will allow investors and traders to use a new option to invest in midcap companies. Notably, of late, the midcap stocks have recorded a rise.
BSE Focused Midcap Index
This BSE Focused Midcap Index will include the top 20 midcap companies in the country. The companies will be included in the index based on their free-float market capitalisation. The particular BSE index will include only strong and large midcap companies. This index will focus on selected companies rather than the entire midcap market.
BSE Midcap Index Derivatives: F&O Contract Details
Futures and Options (F&O) contracts will be included on this index. All these contracts will be cash-settled. This means there will be no delivery, only cash settlement. These contracts will expire on the last Thursday of every month. Th system is currently applicable to other indices as well.
Recently, SEBI has made some changes in the derivatives market. Now, each exchange will have only one weekly expiry. The index is being introduced to reduce excessive speculation and lower risk. After this change, the market is now focusing more on monthly contracts. The investors having an appetite for midcap companies but prefer to focus on selected companies rather than the entire market will be looking to enter the BSE Focused Midcap Index. It will also help traders with hedging and short-term strategy planning.
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