The National Commodity and Derivatives Exchange (NCDEX) announced the beginning of trading in India’s first agri futures index called NCDEX Agridex.
Its futures contracts expiring in the months of June, July, September and December will be available for trading from May 26.
“Agriculture is a key pillar of the Indian economy and contributes significantly to employment and economic growth. NCDEX has always played an important role in providing risk management tools for the Indian agricultural value chain,” said Managing Director and CEO Vijay Kumar.
“The introduction of Agridex futures is another important step in the same direction. Agridex futures contracts will provide investors one more tool for trading and risk management at a composite level,” he said in a statement.
Agridex is a return-based index comprising of 10 liquid commodities traded on NCDEX. It has commodity-wise and sector-wise floors and caps with no single commodity or sector dominating the index.
Kumar said Agridex has a very low correlation with other asset classes and indices. To ensure diversification, no group of related commodities may constitute more than 40 per cent of total weightage in the index.
The rollover will be done on the first three days of the expiry month and the index will be rebalanced annually on the first business day of April. A floor and a cap are enforced upon the weights of each commodity.
Sector-wise capping is done based on the aggregated weights of each sector. Agridex is a comprehensive agri commodities index which provides a holistic view over this segment.
NCDEX has partnered with NSE Indices, a leading index service provider, to maintain and disseminate real-time NCDEX Agridex values.
NCDEX is a leading agricultural commodity exchange offering services across the entire value-chain of agricultural commodities.