The implementation of new Futures and Options (F&O) rules in India could see Jio Financial and Zomato entering derivatives trading and potentially being included in the NSE Nifty 50 index.
This development comes as a result of significant changes in equity derivative regulations introduced by the Securities and Exchange Board of India (SEBI).
Potential Inclusions in Nifty50
According to Abhilash Pagaria, Head of Nuvama Alternative and Quantitative Research Analysis, if Jio Financial and Zomato enter the derivatives segment before mid-August, they are likely to be included in the Nifty50 index during the September review, alongside Trent.
The inclusion is based on their market cap and turnover, which have significantly increased since the last review in 2018.
Benefits of Nifty50 Inclusion
Inclusion in the Nifty50 index could bring substantial financial benefits. Jio Financial might attract $466 million in passive fund buying, Zomato $491 million, and Trent $463 million.
These investments reflect the confidence of passive fund investors and could lead to increased liquidity and market visibility for these companies.
Key Changes in F&O Regulations
SEBI has made several major changes to the equity derivative regulations, including:
Increasing the average daily delivery value in the cash market to Rs 35 crore (up from Rs 10 crore) over the last 6 months for a stock to qualify for the F&O segment.
Setting a market-wide position limit of at least Rs 1500 crore (up from Rs 500 crore).
Introducing a product success framework to prevent market manipulation through illiquid securities, with derivatives being discontinued if trading volumes remain low for more than 6 months.
These changes aim to strengthen the link between the cash and F&O markets and enhance investor protection.
