Nifty Future Tips.
What is Nifty futures?
Nifty futures, in reality, are index futures where the underlying is the S&P CNX Nifty index.
However, in India, index futures trading commenced in 2000 on the National Stock Exchange (NSE).
Moreover, for the Nifty futures contracts, the permitted lot size is 50, and in multiples of 50.
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Nifty Future Tips
In fact, like other futures contracts, Nifty futures contracts also have a three-month trading cycle — the near-month, the next month and the far-month. Nifty Future Tips.
So, after the expiry of the near-month contract, a new contract of a three-month duration would be introduced on the next trading day. Best Digital Marketing Course in Indore.
In reality, investors can trade in Nifty futures by having a margin amount in their account.
However, this margin is a percentage of the contract value. Nifty Future Tips.
Usually, it is about 10-12 percent. Nifty Future Tips.
So, by trading in index futures, an investor is buying and selling the basket of stocks comprising the index, in their respective weights.
In fact, stock index futures are traded in terms of a number of contracts. Nifty Future Tips.
However, each contract would be to either buy or sell a fixed value of the index.
Moreover, the value of the contract will be the multiplication of lot size by the index value.
There are times when you sell the stock, but there is an upside in the market, thus resulting in lost potential profits. Nifty Future Tips.
Index futures help you mitigate this risk.
By buying index futures when you are short on the stock, you can minimize the number of potential profits lost.
Also, you may have face the times when you own a portfolio and are uncomfortable about market conditions.
You can hedge this risk by selling index futures.
The concept rests on the fact that every portfolio has index exposure.
Further, the counting of risks is as per the fluctuations in the index.