How does S&P CNX Nifty compare with other indices?
The S&P CNX Nifty is favourable on various parameters. Diversification: S&P CNX Nifty is a more diversified index, accurately reflecting overall market conditions. The reward-to-risk ratio of S&P CNX Nifty is higher than other leading indices, making it a more attractive portfolio hence offering similar returns, but at lesser risk. Liquidity: The ‘liquidity ratio’ is defined as trading volume over one year divided by, market capitalisation today. Nifty’s liquidity ratio during the last one year is approx. 105%, which is high compared to other indices. Hedging effectiveness : The basic risk of Nifty futures will be lower owing to the superior liquidity of Nifty stocks and of NSE. Nifty has higher correlations with typical portfolios in India as compared to any other index. These two factors imply that hedging using Nifty futures will be superior. Governance: S&P CNX Nifty, is managed by a professional team at IISL, a company setup by NSE and CRISIL. There is a three-tier governance stru
