The Nifty indexes track stocks of various size and segments of the economy, providing a gauge of how different segments of India's stock market are performing. Futures provide a way to trade these indexes, by betting on the direction of the index. Futures are used by retail day traders, longer-term traders and institutional traders. Nifty futures also trade in the U.

Nifty futures are infrequently traded, with typically zero daily volume, and will be addressed briefly at the end of the article.

3 Easy Steps to trade in F&O (Equity Future Derivatives) at BSE, NSE, MCX

Nifty futures on the NSE are actively traded, and are therefore more useful to retail and institutional traders. There are three main Nifty futures that trade on the NSE. The Bank Nifty tracks the largest 12 banks on the NSE , and the Nifty Midcap 50 tracks 50 midcap stocks listed on the NSE. CNX Nifty futures contracts provide adequate liquidity for active day traders, hedge funds and longer-term traders, although volume can vary significantly from day to day.

The Bank Nifty is also active enough for most short- and long-term traders, although once again volume can vary significantly from day to day. The Nifty MidCap 50 usually does very little if any volume, and there is not useful information for retail traders. Day traders, swing traders, hedgers, and hedge funds all trade CNX Nifty and Bank Nifty futures.

The liquid market allows for all these traders to attain and exit positions with relative ease most days , and in quantities that suite each class of trader. Trades are usually taken for speculative reasons, anticipating the future direction of the broader stock market CNX Nifty or the banking sector Bank Nifty. Traders can profit from both up or down markets by buying or selling a future respectively.

Hedgers or hedge funds may also use any of the Nifty contracts to hedge other positions. For example, if long a large contingent of stocks a trader may sell some CNX Nifty futures to hedge the long positions. Institutional traders may use the Nifty MidCap 50 for the same reasons mentioned prior, as well as providing funds with more precise exposure to a certain segment of the economy.

Retail traders may want to use it for speculation in the midcap segment of the economy, but lack of volume will significantly hamper these efforts. Each Nifty futures contract has an expiry date, on the last Thursday of the contract month. Traders will typically close out futures positions before expiry, and re-establish positions in futures contracts where the expiry date is further out.

Nearly all futures volume takes place in the contract near expiry. For example, if it is February, nearly all the trading volume will be in the March contract. Nifty futures are traded on the National Stock Exchange NSE of India and are cleared through the National Securities Clearing Corporation Limited NSCCL.

This clearing agency acts as a counter-party to all deals and guarantees settlement so traders can collect profits, and are responsible for losses.

For current information on Nifty futures volume and prices, and to see to when contracts are expiring, visit www. CNX Nifty and Bank Nifty futures volume and current prices are also typically available on large financial sites. Opening a futures position requires that you put a margin payment.

The margin required to open a position fluctuates with volatility, so it may not remain static. There are two Nifty futures contracts traded in the U.

Unfortunately, there is little if any volume in these contracts on a daily basis, and therefore they are of little use to retail or institutional traders. For more information on these products, visit the E-Micro CNX Nifty page or the E-Mini CNX Nifty page on the CME site for more information. Another alternative is to trade the iShares India 50 INDY ETF , which tracks the CNX Nifty Index, and has daily volume of more than , shares. The Singapore Exchange SGX offers the SGX CNX Nifty Index Futures for trade, priced in U.

Often more than 10, contracts change hands on a daily basis in the near-term contract, making it a liquid alternative to trading Nifty Futures on the BSE. Ten Commandments of Futures Trading.

Smile Advisory - what is Nifty Future ? How to trade in Nifty Future

Nifty futures are used by all sorts of traders, from speculative day traders to institutional hedgers and longer-term traders.

Nifty futures can be traded on the BSE in Indian rupee , GSX U. Margin requirements vary by contract and on the BSE will fluctuate based on volatility.

CNX Nifty and Bank Nifty on the BSE provide adequate liquidity for nearly all types of traders, as does the SGX CNX Nifty futures contract on the SGX exchange.

These are the contracts where retail institutional traders will focus their speculative and hedging endeavors. The iShares India 50 ETF also provides a liquid non-futures alternative to trading the CNX Nifty index.

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