NSE's Derivatives-First Index Strategy Evolves with New FPI-Focused Products

Speaking to reporters on the sideline of an event here, Chatterjee noted that using derivatives to construct indices is not new for the exchange, as it has already incorporated such approaches in its offerings over the years.

"The exchange had taken a strategic call around four to five years ago to give preference to stocks in the futures and options (F&O) segment while designing sectoral indices," he said.

He further highlighted that a broader strategy revamp was announced in November last year and began implementation in December.

One of the key indices impacted by the change was the Nifty Bank, also known as Bank Nifty.

"The transition involved extensive consultations with industry stakeholders and was initiated in coordination with the Securities and Exchange Board of India," Chatterjee said.

Discussing new product development, Chatterjee pointed to the recently launched Nifty India FPI 150 index as a significant step in expanding the exchange's index ecosystem.

"The index introduces a unique foreign investment factor to determine the weight of individual stocks, making it easier for foreign portfolio investors to replicate investment strategies," he noted.

Chatterjee added that the launch is part of a broader plan to develop a new family of indices tailored to evolving investor needs.

"The exchange intends to introduce more such products in the future, building on insights from its internal analysis and three decades of experience in index creation," he told reporters.

"Using derivatives to create an index, something that we have done long back. It's not going to be a new thing for us. So, if you look at our sectoral index, I mean almost 4-5 years back we have taken the call that we will have a preference towards stocks which are in F&O segment," he mentioned.

- IANS