The National Stock Exchange (NSE) on Wednesday launched futures and options on the Nifty India FPI 150 Index, adding a new index derivative to its equity derivatives portfolio. According to NSE, the cash-settled contracts will be available in three serial monthly cycles and expire on the last Tuesday of the expiry month. What exactly is the Nifty India FPI 150, and how is it different from a conventional market index such as the Nifty 50?

A basket built around foreign access

The Nifty India FPI 150 was launched by NSE Indices in August 2025. The August 2026 Nifty Indices methodology document says: “Nifty India FPI 150 Index aims to track the performance of top 150 stocks selected from Nifty 500 that ensure accessibility and investibility for foreign investors in India.” It further says that the top 150 are selected based on six-month average foreign-investible free-float market capitalisation, covering the most liquid and high-free-float stocks, with weights also based on foreign-investible free-float market capitalisation.

The index does not track actual FPI flows or identify stocks that foreign investors are buying at any given point. Instead, it looks at how much of a company’s equity remains available to foreign investors within the applicable ownership limits.

What is foreign-investible free float?

In simple terms, free float means shares that are readily available for public trading, rather than those held by promoters or other strategic investors. NSE says its free-float methodology is designed to limit the influence of such strategic holdings and make its indices more investible.

The FPI 150 takes this a step further by looking at the portion of these shares that foreign investors can buy within the regulatory ownership limits.

So, a company may be large and actively traded but still not make it into the index if there is little room left for foreign investors to increase their holdings. Under the methodology, stocks with foreign room of less than 10 per cent are excluded. Stocks that figure on the Central Depository Services (India) Limited (CDSL) and National Securities Depository Limited (NSDL) foreign portfolio investor (FPI) “Red Flag” or “Breach List” are also left out.

Liquidity is another filter. Stocks generally need to rank among the top 350 based on six-month average daily turnover, free-float market capitalisation and full market capitalisation.

The index is reconstituted on a semi-annual basis in March and September based on the previous six-month period data ended January and July, respectively. The index has a base date of October 3, 2022 and a base value of 1,000.

Why the derivatives launch matters

NSE says the new futures and options are intended to provide another instrument for hedging and portfolio diversification. The exchange is offering three serial monthly futures and options contracts, all cash-settled, with expiry on the last Tuesday of the relevant month.

The launch also gives the index another potential use beyond benchmarking. NSE Indices says the FPI 150 can be used for benchmarking fund portfolios and for launching index funds, ETFs and structured products.

For investors, however, the FPI 150 is a basket of companies where foreign investors have relatively greater room and ability to invest. The new derivatives effectively make that particular characteristic of India's equity market tradable.

What does the index look like?

According to the Nifty India FPI 150 Factsheet dated July 31, financial services is its largest sector, accounting for 25.59 per cent of the index as of July 31, 2026. Oil, gas and consumable fuels accounted for 9.84 per cent, information technology 8.43 per cent, healthcare 7.73 per cent and automobile and auto components 7.70 per cent.

Reliance Industries was the largest constituent at 6.66 per cent, followed by HDFC Bank at 4.83 per cent, Bharti Airtel at 4.52 per cent, ICICI Bank at 4.32 per cent and Infosys at 2.99 per cent.

The index therefore has considerable overlap with India's mainstream large-cap market, but its defining filter is foreign investability rather than simply size.