Why did NSE revise Nifty lot sizes for F&O?

This change will be in effect from the far-month July contracts, and the contracts expiring in April, May, and June will continue to have a lot size of 75.

· 2 min read
Why did NSE revise Nifty lot sizes for F&O?
image credits : NSE

In a move that will provide major relief for retail investors, the National Stock Exchange of India has announced that the lot size for Nifty futures and options contracts has been reduced from 75 to 50. This change will be in effect from the far-month July contracts, and the contracts expiring in April, May, and June will continue to have a lot size of 75.

For the computation, the average closing price of the underlying has been taken for one month of March 01st - March 31st, 2021, and this NSE circular shall come into effect from April 30, 2021.

As mentioned by a Zerodha support staff, the main reason for this is that the contract value for derivatives has to be between 5 lakhs to 10 lakhs and if the value is below or above these values, there must be a revision in lot sizes. At current levels, the contract value for Nifty is around 11 lakh and hence this revision has taken place.

Is this good news?

Absolutely. Decreasing the lot sizes for Nifty futures and options contracts will ensure that traders can use lesser capital for each lot of Nifty futures or options they are buying or selling. This is beneficial not only for experienced traders but also for beginners who would like to carefully dabble into the world of futures and options. This revision can help in the position sizing of traders as well, which helps traders minimize risk and maximize returns as per their convenience.

What about other index derivatives?

The NSE has announced that the market lots have been revised only for the Nifty 50 index, and the lot sizes for Nifty Bank and Nifty Financial Services will remain 25 and 40 respectively.

Have lot sizes for any stock derivatives changed?

Some of the biggest companies to have seen a revision in their lot sizes for stock futures and options include:

  • Adani Enterprise Limited - 2000 to 1000
  • Adani Ports - 2500 to 1250
  • Bajaj Finance - 250 to 125
  • IDFC First Bank Limited - 19000 to 9500
  • JSW Steel - 2700 to 1350
  • SBI - 3000 to 1500
  • Tata Motors - 5700 to 2850

The entire list of companies is as given by the National Stock Exchange of India.

image credits : NSE

Also, to encourage active participation in quarterly options contracts on Nifty Bank Index, the NSE has been decided that no transaction charges will be levied on the trades done in quarterly options contracts on the Nifty Bank Index in the futures & options segment of the exchange from April 1, 2021, till September 30, 2021,

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