NCDEX launches NDEX, FINNDEX equity indices

NCDEX, the National Commodity & Derivatives Exchange, unveiled two new equity indices, NDEX and FINNDEX, on Thursday, expanding its reach into the equity and derivatives markets. NDEX is a benchmark of 20 prominent Indian equities chosen from a pool of the top 60 NSE-listed companies. FINNDEX, on the other hand, consists of 15 financial sector stocks, omitting insurance firms, from the top 40 eligible companies.

The selection process for these stocks is based on a composite score that equally weighs free-float market capitalisation, average daily traded value, beta, and volatility. The design aims to balance company size, trading activity, and the stock's market sensitivity. No single stock can dominate more than 15% of the index at any rebalancing, a rule introduced to enhance diversification and reduce the risk of concentration in a single stock.

The indices will undergo reviews and rebalancings twice a year, in March and September, with provisions for additional adjustments under certain conditions. Vikas Goel, NCDEX’s managing director and CEO, emphasized that the introduction of NDEX and FINNDEX marks a significant step in the exchange’s evolution into a multi-segment market infrastructure provider.

He highlighted the growing importance of transparent and well-designed benchmarks as India's capital markets mature and gain more domestic and international participation. Goel stated that these indices are intended to empower investors with better decision-making tools and broaden the range of opportunities available to market participants.

This move is part of NCDEX's broader strategy to transition from a commodity-focused bourse to a diversified market infrastructure provider. Recently, the exchange has ventured into mutual fund transactions and is set to launch equity products, with the exchange expected to receive SEBI's final approval for its equity segment in January. Following approval, NCDEX may introduce derivatives on these indices.