NCDEX, formerly known as the National Commodity & Derivatives Exchange, has unveiled two equity indices, NDEX and FINNDEX, marking another step towards its expansion into equity trading and derivatives.
The launch forms part of the exchange's strategy to diversify beyond agricultural commodities and establish itself as a broader financial market infrastructure provider.
The exchange has also expanded into mutual fund transactions and is preparing to introduce its equity trading segment, subject to regulatory clearance.
NDEX comprises 20 large, actively traded Indian stocks selected from the 60 biggest eligible companies listed on the National Stock Exchange (NSE).
FINNDEX tracks 15 financial sector companies, excluding insurers, selected from a pool of 40 eligible stocks.
Both indices use a composite ranking methodology that considers company size, trading activity and market behaviour.
Free-float market capitalisation and average daily traded value receive weightages of 30% each.
Beta and volatility account for the remaining 40%, with 20% assigned to each measure.
The exchange has capped individual stock weightage at 15% during rebalancing to limit concentration risk and improve diversification.
Index constituents will be reviewed and rebalanced twice annually, in March and September.
NCDEX has also provided for additional changes to index composition under specified circumstances.
NCDEX Awaits Sebi Approval For Equity Trading Expansion
NCDEX Managing Director and Chief Executive Officer Vikas Goel described the introduction of the indices as an important milestone in the exchange's transition towards a multi-segment platform.
He said transparent benchmarks were becoming increasingly important as Indian capital markets attracted greater participation from domestic and international investors.
According to Goel, the indices aim to support informed investment decisions and provide additional market tools.
The exchange expects final approval from the Securities and Exchange Board of India (Sebi) for its equity segment in January.
Sources indicated that NCDEX could introduce derivatives linked to NDEX and FINNDEX during the second half of the next financial year, subject to regulatory approval.
The proposed launches would further broaden the exchange's offerings beyond its traditional commodity market operations.
