One of the profits of Currency trading is the simple fact that traders could possibly obtain access to any significant asset indicator or a exotic money at the futures stores, with the profit of trading margin or leverage. While Japan’s Nikkei 225 and also the London FTSE100 stocks are a few of the non-American equity index futures stores this certain may trade, the NIFTY50 futures markets makes for an intriguing asset index futures contract to trade.
For stocks traders that are watching out of interesting stores apart from the typical ups and downs forth in trading the very popular S&P500, Nasdaq or the Dow emini contracts, even the NIFTY50 futures market offers only the ideal degree of excitement as well as variety. For those who have traded the U.S. equity indicators and also the Japan’s Nikkei225 indicator futures contract, there’s a particular amount of significance between the index futures cost moves. The NIFTY50 indicator alternatively acts a little differently rendering it quite particular. As a result of India’s standing as among the best emerging marketplace economies and its own position of strength from Asia, the NIFTY50 futures contracts result in a more exceptional trading tool. Forex traders that enjoy volatility will see trading that the NIFTY50 futures contract to be more enjoyable.
The NIFTY50 futures track monitor the amounts of the underlying stock that’s that the NIFTY50 currency stores. Listed here are seven matters that a futures trader should be aware of before you begin investing in the NIFTY50 stocks stores.
1. Nifty 50 is just one of the top indicator for India’s asset stores
NIFTY50 indicator is the standard asset marketplace indicator for its Indian equity stores over the National Stock Exchange (NSE) and is just one of the 2 chief benchmark indicators for its Indian sub continent. The other principal indicator besides NIFTY50 could be that the Sensex, utilized by the Bombay Stock Exchange of BSE, which monitors 30 businesses. The NIFTY50 Index was previously known as the S&P CNX Nifty Index before 2013.
NIFTY50 Stock Index Chart
The name is based on National and 50, which united becomes NIFTY50. The indicator is possessed and handled by India Index Services and products (IISL). The NIFTY50 isn’t to be confounded with the big cap assets by the NYSE found from the 60’s and 70’s and contained businesses like Disney, Coca-Cola, along with Dow Chemicals etc forth.
The Nifty50 is actually a standard indicator for India, that has been established in 1995 and is still relatively fresh. The indicator monitors 51 organizations. The NIFTy50 indicator is a financing weighted indicator and madeup of a vast variety of businesses from Pharmaceuticals to Media & Entertainment into IT and Automobiles industries. In general there are 2 4 businesses which compose the NIFTY50 indicator. The NIFTY50 index has been made in 1995 having a base price of 1000.
2. NIFTY50 Futures Contract Specifications
The futures ticker logo for NIFTY50 is currently MNF on the Globex electronic platform. Even the NIFTY50 futures contract is full of U.S. dollars, including the NIFTY50 indicator that’s priced in Indian rupees. The contract size is actually a multiple of 2 times the indicator value, meaning if the NIFTY50 indicator are currently at 8000, the contract size is 2 times the indicator or $16,000. The NIFTY50 futures-contract is currently available as emini variation simply and features a minimum sign size of 0.5 indicator points. Each indicator line is valued at $1.00
Trading on the NIFTY50 futures contract could be precisely the similarly with trading hours from Monday through Friday, beginning with 4pm the last afternoon by 5pm on the present day having a 1-hour trading fracture out of 8:30 through 9:30 PM.
One of the special areas of investing in the NIFTY50 futures-contract is that much like this Nikkei futures contract, the NIFTY50 contracts come underneath the mutual offset system (MOS). Which usually means that the NIFTY50 futures contract is exchanged at the CME Group futures or perhaps the Singapore Exchange (SGX). A trader might designate a trade being an MOS before implementation and choose whether CME or even SGX can carry the positioning.
Below is a overview of this CME Group’s e-mini NIFTY50 futures specification.
NIFTY50 Futures Contract Specification
3. Low trading volumes and trading periods
The NIFTY50 futures contracts aren’t the most actively traded futures contracts. On average the volume on NIFTY50 futures are around 600 – 800 contracts. It is normal for the NIFTY50 futures contract to see low volumes on most days in only double digits. This lack of sufficient trading volumes can pose a risk for most futures day traders and a large volume of orders can significantly move the amounts.
NIFTY50 Trading Volumes
Due to the low volumes, not all retail futures brokers list the NIFTY50 futures contracts and therefore futures day traders who want to trade specifically the NIFTY50 futures will need to shop around for the futures broker that offers trading the NIFTY50 futures contracts.
Besides the lower trading volumes, the trading hours on the NIFTY50 futures also plays a big role. The NIFTY50 cash marketplace trades from 9:15AM – 3:30PM on weekdays, which is about 9:45PM through 4AM central time. Therefore, traders based in the U.S. will need to stay awake during the cash marketplace hours where liquidity is higher than usual. The futures stores open 15 minutes before the official cash marketplace open, which is the pre-market trading hours where some amount of liquidity is seen.
4. NIFTY50 Futures intraday trading strategies
Due to the fact that the NIFTY50 tracks the 50 (51) large cap assets in the Indian asset marketplace it is one of the sophisticated index for trading a basket of assets. Due to the fact that no individual asset can influence the index significantly, it is easier to trade the NIFTY50 based on technical analysis alone, similar to trading the emini S&P500 futures or the emini Dow contracts. However, as mentioned in the previous item, day traders need to ensure that they trade during times of sufficient liquidity and trade during the cash marketplace hours in order to avoid being trapped into a position on low volume, which can then turn risky as volumes dies out as the cash marketplace closes.
There are many technical strategies that have stood the test of time on the NIFTY50 futures cost charts. Day traders can start with the most basic, moving average crossover, or trading the before all else trading hour of the NIFTY cash stores in order to day trade for a few points. The day trading futures margins for the NIFTY50 contracts are usually around $200 – $500 making it a lot more affordable to trade on lower capital.
5. CME NIFTY50 futures, not to be confused with the local NIFTY futures
While the CME futures offers the NIFTY50 futures contracts, these are not to be confused with the NIFTY futures contracts offered on the National Stock Exchange. The main difference between the local NIFTY futures contracts and those offered by the CME Group is the contract size, value and the pricing itself. For example, the local NIFTY futures contracts have a contract size of 25 units with the contract value being a multiple of the contract size (25 times index value in Indian rupees).
Besides these primarily differences, the local NIFTY50 futures trade in a similarly way, meaning the amounts are marked to marketplace on a daily basis and trading the NIFTY futures is done on margin.
6. Factors that affect valuation in the cash stores
Trading the NIFTY50 futures, although technical, still requires traders to keep an eye out on the fundamentals. However, the fundamentals that govern the NIFTY50 asset index which is the underlying marketplace is usually a bit different than compared to trading the actual assets. Broadly put, fundamentals such as inflation, GDP play a major role in determining the momentum in the asset index. Unlike the advanced economies where interest rates are close to zero and seldom move twice during a year, emerging economies have different dynamics in play.
Interest rates is changed, sometimes with warning and sometimes coming as a surprise to marketplace participants which eventually tends to influence amounts of the NIFTY50 index quite adversely.
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Besides monetary policy, there are also geo-political and other risks that are common to emerging stores such as India. For example, the most recent case of demonetization, which took the Indian stores and the world by surprise led to a 4.3% decline on the NIFTY50 index on a single day.
While technical analysis can help, totally unforeseen events such as these tend to play havoc on the stores and something that futures day traders need to keep an eye on. It is a bit difficult especially due to the time zones and the marketplace hours.
7. Influence of the U.S. dollar’s exchange rate
The U.S. dollar’s exchange rate also plays a major role when it comes to influencing the cost of the NIFTY50 index. Although the USDINR exchange rate is not one that is widely used, the exchange rate plays a crucial role for sectors such as Information Technology and other companies that are used as outsource hubs. Typically a stronger Indian rupee tends to eat into the benefit margins for the services export oriented companies while a weaker Indian rupee tends to have a positive impact.
Although no each company listed on the NIFTY50 index has a single highest weightage which tends to balance the risks on the index, keeping track of the exchange rate for USDINR is important if you want to trade the NIFTY50 futures in the long term.
Besides the monetary policies from the U.S. that affect the dollar, NIFTY50 futures day traders should also focus on monetary policies from India’s Reserve Bank as well which. Bear in mind that USDINR does not attract high volumes despite the Indian rupee being a free floating exchange rate.
The chart beneath shows the overlay of the USDINR exchange rate (white line) and the NIFTY50 cash marketplace index.
NIFTY50 Cash Market Index (Right) and USDINR (Left)
In conclusion, the NIFTY50 futures contracts are one of the more exotic futures contracts which track the NIFTY50 cash stores from India’s National Stock Exchange. Due to the fact that the NIFTY50 futures contracts are exotic, the trading volumes are typically lower, meaning that futures day traders need to be very cautious in order not to obtain trapped by illiquid marketplace conditions.
Another major factor to consider when trading the NIFTY50 futures contract is the timing of the actual marketplace hours. Whatever little volume one gets to see on the NIFTY50 emini contracts are during the cash marketplace trading hours which is closer to 9:45PM central time thus putting the contract out of reach for most traders in other time zones.