India INX, the subsidiary of BSE and the country’s first international exchange, is set to launch futures contracts based on the Sensex index. According to Moneycontrol, these contracts will feature monthly expiry and settlements in US dollars. This move, aimed at attracting global investors, is expected to bolster India’s financial market on an international level.
In this article, we’ll explore what Sensex contracts are, how they work, their key advantages, and how they differ from NSE IX’s existing Nifty 50 index contracts. Additionally, we’ll examine their potential impact on investors and the Indian market. Let’s delve into the details.
What are Sensex Contracts?
Sensex contracts are financial derivatives based on the performance of the BSE Sensex, the benchmark index of the Bombay Stock Exchange. These contracts allow investors and traders to speculate on the movement of the Sensex or manage risks through hedging. Primarily comprising futures and options, these derivatives can be traded on international exchange platforms.
Key Features of Sensex Contracts
The most notable feature of these contracts is their settlement in US dollars. Here are some key highlights:
- Monthly Expiry: Contracts will expire on the last Tuesday of each month.
- Settlement Currency: Settlements will be made in US dollars.
- Minimum Ticket Size: The minimum ticket size will be $1. For instance, if the Sensex trades at 83,000, the value of one futures contract will be $83,000.
- Underlying Index: The contracts will be based on the BSE Sensex, India’s leading stock market index.
Difference Between NSE IX and India INX
Currently, NSE IX, a subsidiary of the National Stock Exchange, offers Nifty 50 futures contracts under the Gift Nifty initiative. With the launch of Sensex contracts, investors will have an additional option to explore.
| Feature | NSE IX (Gift Nifty) | India INX (Sensex Contracts) |
|---|---|---|
| Base Index | Nifty 50 Index | BSE Sensex Index |
| Settlement Currency | US Dollar | US Dollar |
| Expiry Date | Monthly (Every Thursday) | Monthly (Last Tuesday of the month) |
| Launch Year | Already Active | Soon to be Launched |
Why Are Sensex Contracts Unique?
- Global Accessibility: Settlements in US dollars make it more attractive to international investors.
- Low Entry Barrier: With a minimum ticket size of $1, even small investors can participate.
- Trusted Index: The BSE Sensex is one of India’s most reliable and stable indices.
Expert Opinions
Market experts believe that the launch of Sensex contracts will play a pivotal role in connecting Indian markets with global trading platforms. It will also enhance the activity within GIFT City (Gujarat International Finance Tec-City) and align with government initiatives like “Make in India” and establishing India as a financial hub.
Conclusion
The launch of Sensex contracts by India INX represents a significant opportunity for Indian and global investors alike. With features like minimum ticket size and settlements in US dollars, these contracts could prove transformative for the market. If you are keen on stock market investments, this development could mark a pivotal change for you.
Are you planning to invest in Sensex contracts? Let us know in the comments section!
