Index Futures

Index Futures A new mode of stock market investment in which, instead of buying individual shares one buys so many units of a recognized index, such as the BSE Sensitive Index. The trading unit is so many rupees per index point. Thus if the BSE Sensex stands at 3000 points, and the price of an index point is Rs 1000 an investment on 100 units would cost Rs 30,00,000. If the index rises to, say 3200 points, one who has bought 100 units at 3000 points will make a profit of Rs 200,000. The buyer buys a futures contract at the 3000 level and sells a matching futures contract at the 3200 level. Index futures are expected to be traded of the Trissur Index Futures and Options Exchange. The index base will be the BSE Sensitive Index.

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