NCDEX Launches NDEX and FINNDEX: New Equity Indices to Track Indian Stocks

22 Oct 2026 , 06:45 PM

The National Commodities and Derivatives Exchange (NCDEX) is preparing to enter the equity index segment with two new indices, NDEX and FINNDEX. The move marks an expansion beyond its traditional focus on agricultural commodities and aims to provide investors with new ways to track the Indian stock market.

NDEX will track 20 large and actively traded Indian companies, while FINNDEX will focus on 15 companies from the financial sector, excluding insurance companies. Both indices will use a rule-based system to select stocks and decide their weight in the index. The exchange is also exploring the launch of mutual funds, exchange-traded funds (ETFs) and, later, futures and options contracts linked to these indices.

How Will NDEX and FINNDEX Work?

NDEX will include 20 large and actively traded stocks selected from a group of the top 60 companies. FINNDEX, meanwhile, will track 15 financial sector companies, excluding insurers. Both indices will follow a multi-factor approach. This means the selection and weighting of stocks will depend on four factors rather than mainly on the size of a company in the stock market.

The four factors and their respective weights are:

Factor	Weight
Free-float market capitalisation	30%
Average daily traded value	30%
Beta	20%
Volatility	20%

• Free-float market capitalisation helps measure the market value of shares of a company that are available for trade.
• Average daily traded value helps measure the average value of the shares traded daily.
• Beta helps measure how much a stock is expected to react to the market, and
• Volatility measures how much a stock’s price fluctuates.

The combination of all four helps NCDEX to take into account a company’s market value, average traded value while developing its indices.

Why Is NCDEX Introducing These Indices?

According to NCDEX CEO Vikas Goel, existing headline indices such as the Nifty 50 and Sensex give considerable importance to free-float market capitalisation. NCDEX believes that looking mainly at company size may not always provide a complete picture of market activity. For example, a large company may have relatively low price movement or different trading patterns compared with other stocks.

The proposed NDEX and FINNDEX aim to address this by considering trading value, beta and volatility alongside market capitalisation. However, using more factors does not automatically make an index more accurate or less risky. Its effectiveness will depend on how the selected stocks perform under different market conditions.

NCDEX Says Back-Testing Shows Strong Historical Performance

NCDEX has tested the proposed indices against other market benchmarks over five-year and 10-year periods. Goel noted that the results demonstrated that NDEX and FINNDEX outperformed comparable benchmarks during the periods of investigation. The outcomes can be used to evaluate an investment strategy, but cannot be relied on to ensure future returns, since the performance of a strategy also depends on changing market conditions, costs, liquidity and other factors.. The indices’ live-market performance will become clearer after their launch.

ETFs and Mutual Funds May Be the First Products

There are talks going on between NCDEX and several asset management companies (AMCs) to bring out Mutual Fund (MF) and Exchange-Traded Fund (ETF) products that would be tracking the NDEX and FINNDEX. Should these products see the light of day, they would provide investors with a means to invest in the shares comprising the indices without having to buy every stock. Since the indices follow fixed selection rules, the products could also offer a way to invest through a rules-based strategy. However, the availability, features, and costs of these products will depend on their final structure and launch plans.

When Will NDEX and FINNDEX Launch?

NCDEX is targeting the first quarter of FY28 for the official launch of the indices. This corresponds to April–June 2027, assuming the timeline follows India’s financial year. The exchange also plans to explore futures and options contracts linked to both indices after the initial cash-market products are established.

According to Goel, derivatives could follow around two to three quarters after the cash-market products are launched. This is an indicative timeline and will depend on regulatory approvals and market readiness.

Why Is Liquidity Important Before Derivatives Are Introduced?

Before launching derivatives, NCDEX wants to ensure there is sufficient trading activity in products linked to the indices. Liquidity refers to how easily an investment can be bought or sold without causing a significant change in its price. Strong liquidity generally makes it easier for investors to enter and exit positions. NCDEX plans to work with investors and other market participants to build trading activity and explore direct listings where permitted. Adequate liquidity in the underlying market and related products will be important for the smooth functioning of futures and options contracts.

NSE Indices to Calculate and Maintain the Benchmarks

NCDEX has selected NSE Indices, a separate legal entity, to calculate and maintain NDEX and FINNDEX.

Goel said the arrangement would help asset management companies and other market participants develop investment products linked to the indices. The benchmarks will use prices from the National Stock Exchange (NSE) on a tick-by-tick basis, meaning prices will be updated with each eligible market-price update. Using this pricing system could make it easier to calculate index values and manage investments linked to the benchmarks, particularly during the early stages of product development.

NCDEX Aims to Connect Equity and Commodity Investors

The introduction of NDEX and FINNDEX is also part of NCDEX’s wider plan to connect equity-market participants with agricultural commodity markets. The exchange wants equity investors to explore agricultural commodities and existing commodity-market participants to consider equity investments.

Goel highlighted the potential diversification benefits of agricultural commodities and cited returns of around 13%–15% over the preceding four to five months. This was his observation about the market during that period and should not be treated as a guaranteed or expected future return. Diversification means spreading investments across different asset classes rather than depending on a single type of investment. Different assets can perform differently under changing market conditions, although diversification does not eliminate investment risk.

What Does NCDEX’s Move Mean for the Market?

With NDEX and FINNDEX, NCDEX is looking to expand beyond its traditional agricultural commodities business and enter a wider range of financial products. The proposed indices will use four factors to select and weight stocks, giving importance to company size, trading activity and price behaviour. If the planned ETFs and mutual funds are launched, investors could gain additional ways to invest in Indian equities.

The proposed introduction of derivatives could further expand the exchange’s offerings, subject to regulatory approvals and sufficient market liquidity. For now, the key milestones to watch are the official launch of the indices, the development of investment products linked to them and the exchange’s progress towards introducing futures and options. The long-term success of the initiative will depend on investor participation, product availability, liquidity and how the indices perform under actual market conditions.

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