The National Stock Exchange will waive transaction charges on all trades done on its new mini-Nifty contracts till March 31, 2008. NSE's move takes the battle for turnover on the mini-index contracts to rival Bombay Stock Exchange's camp.
The Chhota Sensex, BSE's mini-index contract, much to the surprise of market players, clocked a higher turnover than that of NSE's mini-Nifty contracts last week, the first week of the launch for both the mini-contracts.
The total turnover by value on the mini-Nifty was Rs 176.55 crore (Rs 1.77 billion), while that on the Chhota Sensex was Rs 187.95 crore (Rs 1.88 billion) on Friday.
However, in terms of the volume of trade, the mini-Nifty outsmarted the Chhota Sensex by a big margin - 282,360 versus 90,795 for the Chhota Sensex. NSE communicated the decision on the waiver to its members through a circular late on Friday.
The capital market regulator, the Securities and Exchange Board of India, had allowed the launch of mini-contracts on the Nifty and the Sensex to encourage and enable small investors to mitigate risk and enable easy access to popular indices.
The rising turnover on the Chhota Sensex is surprising, given that BSE has been a fringe player in the equity derivatives market, which is monopolised by rival NSE.
The trading volume in the standard Nifty futures alone was Rs 11,680.27 crore (Rs 116.80 billion), while the comparable turnover on the Sensex was not even 10% of the figure at around Rs 1,000 crore (Rs 10 billion).
To encourage investors to trade more on its other newly introduced index derivatives the Nifty Junior, CNX100 and Nifty Midcap50 NSE had, in a circular dated December 31, announced similar waivers of transaction charges.
"NSE will attract investors to the mini-Nifty, which may have a cascading effect on these indices," said a derivatives analyst at a brokerage house.
In another development, NSE has fixed 5% circuit filter on 287 stocks. The list includes Videocon Industries, Zicom Electronics, VLS Finance, Williamson Magor, Vishal Exports, VIP Industries, Uttam Galva Steels, Usha Martin, Tamil Nadu Petroproducts, Tourism Finance Corporation, Transwarranty Finance, Suven Life Sciences, State Trading Corporation of India, SREI Infrastructure, Oudh Sugar and Adani Enterprises.
Similarly, the exchange has also put 10% circuit limit on 110 stocks, which include UCO Bank, Zandu Pharmaceuticals, Thomas Cook (India), Walchandnagar Industries, Venky's India, Sical Logistics, Ramco Systems, Pochiraju Industries and Pritish Nandy Communications.
The circuit on these stocks will ensure that the prices will not go up or down beyond a limit on a given day. Recent days have seen sharp run-up in prices of several small- and mid-cap stocks.
NSE has also revised the circuit limit of 94 stocks. For 47 stocks, the circuit was hiked from 5% to 10%, while for another 42 stocks the circuit limit was hiked from 10% to 20%.
For the three stocks - Hindustan Motors, Nelco and Tricom - NSE has reduced the circuit from 20% to 10%.