NSE introduces F&O contracts on Nifty Financial Services Index (FINNIFTY)

NSE has introduced F&O contracts including weekly options on Nifty Financial Services index - FINNIFTY that covers the top banking, insurance, housing finance, NBFC and other financial services companies. Trading in these contracts will start from Monday 11th, 2021.

The symbol for the Nifty Financial Services (FINNFITY) contracts and the index on Kite is FINNIFTY.

For all of us trading Banknifty F&O, this index offers an exciting mix extending to the whole BFSI sector and not just banks.

Index constituents

Company Industry Weight%
HDFC Bank Banks 27.13
HDFC Housing Finance 17.51
ICICI Banks 14.14
Kotak Banks 12.1
Axis Banks 6.46
Bajaj Finance NBFC 5.64
SBI Banks 4.06
Bajaj Finserv Insurance 2.29
HDFC Insurance Insurance 2.21
SBI Life Insurance Insurance 1.43
ICICI Lombard General Insurance Insurance 1.37
Shriram Transport Finance NBFC 0.87
ICICI Prudential Life Insurance Insurance 0.74
Piramal Other Financial Services 0.68
Bajaj Holdings & Investments NBFC 0.66
Cholamandalam Investment & Finance NBFC 0.66
HDFC AMC Other Financial Services 0.59
Power Finance Corporation Financia Institution 0.54
REC Financia Institution 0.49
Mahindra and Mahindra Financial Service NBFC 0.44

Sectoral representation

Nifty Financial Services Nifty 50 Nifty 500 Nifty Bank
Banks 63.1 26.5 20.3 100
Housing Finance Companies 18.5 7.5 5.6 0
NBFCs 8.1 2.3 3 0
Insurance Companies 8 2.5 2.5 0
Other Financial Services 1.3 0 1.4 0
Financal Institutions 1.1 0 0.3 0
Total Financial Services Exposure 100 38.7 33.2 0

Nifty Financial Services is a far more diversified index than Bank Nifty.

Risk and return measure comparison of the indices.

CAGR returns Annualised Volatility Return-Risk Ratio
Period Financial Nifty Nifty Nifty Financial Nifty Nifty Nifty Financial Nifty Nifty Nifty
Services 50 Bank 500 Services 50 Bank 500 Services 50 Bank 500
Since Inception 18.7% 13.9% 16.9% 13.9% 29.3% 22.9% 30.5% 22.2% 0.64 0.61 0.56 0.63
15 years 16.9% 12.6% 14.9% 12.1% 29.3% 22.9% 30.2% 22.1% 0.58 0.55 0.49 0.55
10 years 13.3% 9.9% 11.1% 10.0% 23.6% 17.5% 24.9% 17.0% 0.57 0.56 0.45 0.59
7 years 19.0% 13.4% 16.3% 14.2% 22.8% 17.2% 24.0% 17.0% 0.83 0.78 0.68 0.84
5 years 17.3% 13.3% 13.7% 12.6% 23.7% 18.2% 24.8% 17.7% 0.73 0.73 0.55 0.71
3 years 13.6% 11.2% 7.3% 7.8% 27.8% 21.1% 28.9% 20.3% 0.49 0.53 0.25 0.38
1 years 4.1% 15.7% -2.6% 17.4% 41.2% 31.3% 43.1% 29.5% 0.10 0.50 -0.06 0.59
6 months 43.5% 36.0% 46.6% 36.1% 24.0% 15.5% 27.5% 15.0% 1.81 2.32 1.69 2.40
3 months 42.3% 24.2% 46.0% 23.0% 24.2% 14.4% 27.1% 13.8% 1.75 1.67 1.70 1.67

Nifty Financial Services beta and correlations with Nifty 50 Index, Nifty Bank and Nifty 500 Index.

Beta relative to Nifty Bank Correlation with Nifty
Services Nifty 50 Nifty Bank Nifty 500 Services Nifty 50 Nifty Bank Nifty 500
Since Inception 0.94 0.66 1 0.64 0.98 0.88 1 0.88
15 years 0.95 0.66 1 0.64 0.98 0.88 1 0.88
10 years 0.92 0.63 1 0.61 0.97 0.89 1 0.89
7 years 0.92 0.64 1 0.63 0.97 0.89 1 0.88
5 years 0.93 0.66 1 0.64 0.97 0.9 1 0.89
3 years 0.93 0.66 1 0.63 0.97 0.91 1 0.9
1 year 0.94 0.67 1 0.62 0.98 0.92 1 0.91
6 months 0.84 0.47 1 0.44 0.97 0.84 1 0.81
3 months 0.86 0.45 1 0.4 0.96 0.84 1 0.79

Contract specifications

Particulars Futures Options
Symbol FINNIFTY FINNIFTY
Instrument FUTIDX OPTIDX
Tick Size (Price Steps) Re 0.05 Re 0.05
Contract Size (Lot Size) 40 40
Trading Cycle 7 serial weekly excluding the monthly expiry and 3 serial monthly Contracts.
Expiry Day Last Thursday of the expiry month for the monthly contracts and Thursday of the expiring week for weekly expiry contracts excluding the expiry week of monthly contract. If the Thursday is a trading holiday, then the expiry day is the previous trading day.
Strike Scheme - 30-1-30
Strike Interval - 100
Option Type - Call European (CE) and Put European (PE)
Settlement Cash Settled Cash Settled
Daily Settlement Price Last half hour VWAP of futures. In the absence of trading in the last half an hour, the theoretical price would be considered. -
Final Settlement Price Index closing value on the last trading day Index closing value on the last trading day
Quantity Freeze 5001 5001
Price Band Operating range of 10% of the base price A contract specific price range based on its delta value is computed and updated on a daily basis
Spread Contracts M1 M2 M1 M3 M2 M3 W1 W2 W1 W3 W1 W4 W2 W3 W2 W4 W2 W5 W3 W4 W3 W5 W3 W6 -

Check out these whitepapers by NSE for more on the index and the derivative contracts on it:

  1. Nifty Financial Services Index (FINNIFTY)
  2. Derivatives on the Nifty Financial Services (FINNIFTY) Index

You can start tracking the Nifty Financial Services index on Kite by adding it to the market watch. The index symbol is FINNIFTY.

Do check out this conversation Abid had with Alok Dharia on what this index means to you as traders

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For options its similar to Bank Nifty and Nifty, right? Premium* lot size is the amount that need to be deposited for initiating a trade, right?

Every process is the same as trading in Nifty and Bank Nifty F&O.

Thanks sir.

where is the FandO what is the script name for Futures ?

Will it have weekly contracts. And what about liquidity, will they liquid enough to trade any idea.

Hi Rahul, the F&O based on Nifty Financial services will be available for trading from January 11, 2021. You will be able to see the contracts on Kite from then onwards, until then you can track the Nifty Financial Services Index (Symbol: NIFTY FIN SERVICE) to track price movements.

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Will this reduce volumes in bank nifty? Other F&O contracts on IT etc have never really picked up.

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@ShubhS9 i want to know how the corelation with nifty bank and financial services index ,
which index have high volatile

You can find all the details about the Nifty Financial Services Index here.

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What will be the required margin to sell one lot of Naked option comapred to Nifty 50.

Exact margin requirement will know only when F&O start trading, but should be similar to margin requirements for Nifty and Bank Nifty.

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@ShubhS9 @siva @nithin why all index are expiring in same day as Thursday , its no useful for traders as like me . if its expiring in different day our expiry day trading profit will improve , expiry trading in different days will boost liquidity and exchange and brokers and traders all will get benefit , all index are expiraing in same day we cannot trade in all index its not possible , so only before IT index get out from option trading because of no liquidity , NSE and BROKERS want to give suggestion to SEBI index want to expire in different days in weekly basis

I read that BSE shifted its weekly expiry from Thursday to Monday in June 2020 -

Haven’t traded in the BSE derivatives segment but read that its turnover has been increasing since that decision -

But when checking BSE Derivatives Chain page, there is always very low liquidity

@Prayag BSE done the good job , but derivates volumes is not there , not all the brokers are enable to trade f&o in BSE , the same we need in NSE

Didn’t understood your reason, also same expiry for all indices on same exchange is a norm across the globe, I personally don’t know how having different expiry day for nifty and banknifty will help anyone, can you explain a bit more if possible.

We have niftybees in cash equity for nifty future.
We have bankbees in cash equity for banknifty future .

What do we have in cash equity for this new financials service index future ?
@MohammedFaisal

Currently there are no ETF’s based on Nifty Financial Services Index.

NSE has shared a detailed write-up containing all the index constituents and some important contract information here.
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Copy of the white paper shared by NSE on the Financial Services index with details on the weightage, stock selection, interesting comparisons on returns, volatility and R-R ratio with NIfty 50, Bank Nifty, etc.



Also, NSE has changed the symbol to FINNIFTY from FINANCIALS as decided earlier.

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