Both the major stock exchanges in India that is the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) have created a number of indices. Some of the major indices are as follows:

BSE 30 (Sensex)
BSE 100
BSE – 200
BSE –500
S and P CNX Nifty
S and P Mid cap
S and P CNX 500

The Sensex and Nifty are the most popular indices. Both of these are considered bench mark indices

Trading is also allowed in Index Futures. A Index future are the future contracts for which the underlying is the cash market index. In India futures on both BSE Sensex and NSE Nifty are traded. By trading in this index futures the investors are betting on the state of the economy or collectively on the future market values of the shares of leading companies from major industrial groups. In a normal contract for purchase of equity shares, physical quantity of shares is delivered but in a futures contract there will be nothing to be delivered.

In the cash market there is an ascertainable quantity of the security that is being traded. This quantity is subject to the upper limit of the amount of floating stock. In futures trading, the contracts are generated according to the interest of the contracting parties and as such hypothetically any numbers of futures can be traded. Both the BSE and NSE have introduced trading in index future according to a similar pattern.

Any eligible investors who can trade in the cash market can trade in the futures market. For every buyer there is a seller of the futures. What makes them agree on the contract value is the divergence of the views on the likely value of the index future at the expiry of the contract. The contracts are traded in one month two month and three month expiry circles. All contracts expire on the last Thursday of the relevant month.

On the Friday following the last Thursday, a new contract for that expiry period would be introduced for trading. Thus at any point of time, three contracts would be available for trading with the first contract expiring on the last Thursday of that month.

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