NSE gets Sebi nod to launch electricity futures. 3 things exchange expects to achieve

NSE has received approval from the capital market regulator Securities and Exchange Board of India (Sebi) to launch monthly electricity futures contracts. The move comes with a view to deepen India's power markets and support long-term structural reforms initiated under the Electricity Act, 2003.
ADVERTISEMENT In a press release issued on Wednesday, NSE called it a "significant milestone".
"India's journey toward achieving its net-zero emissions target demands substantial investment—estimated at over $250 billion year on year till 2047 as per Niti Aayog report. By 2030, renewable energy sources such as solar and wind are expected to contribute over 50% of the nation's installed power capacity. A robust and dynamic electricity derivatives market is essential to attract this scale of climate finance from both domestic and global investors," the release said.
Through the launch of monthly electricity futures, the NSE aims to achieve 3 things :1) Provide market participants with effective hedging tools against electricity price volatility.2) Enable more accurate price signals in the power sector.
ADVERTISEMENT 3) Encourage capital investments across the electricity value chain—generation, transmission, distribution, and retail.Commenting on the development, NSE MD & CEO Ashishkumar Chauhan said, "This approval is only the beginning of NSE's vision for a broader electricity derivatives ecosystem. Plans are underway to gradually introduce contracts for difference (CFDs) and other long-duration electricity derivatives such as quarterly and annual contracts subject to regulatory approvals.'
ADVERTISEMENT In his view, a calibrated and phased approach will ensure both market integrity and investor confidence and it is crucial for the spot and futures electricity markets to evolve in tandem to create a virtuous cycle of liquidity and stability.A financially settled futures market will allow participants to hedge their risks effectively while a robust day-ahead spot market will ensure reliable price discovery, Chauhan said.
ADVERTISEMENT Sebi nod to the NSE comes on the heels of an approval given to MCX to launch its own electricity derivatives.
Also Read: MCX gets Sebi nod to launch electricity derivatives
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
(You can now subscribe to our ETMarkets WhatsApp channel)

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Time of India

17 minutes ago

• Time of India

Omnitech Engineering IPO: Omnitech Engineering Launches IPO to Raise Rs 850 Crore in Precision Components, ET LegalWorld

Omnitech Engineering, a manufacturer of precision-engineered components, on Monday said it has filed preliminary papers with capital markets regulator Sebi to raise Rs 850 crore through an initial public offering (IPO). The IPO is a combination of fresh issuance of equity shares worth up to Rs 520 crore and an offer for sale component of equity shares valued at Rs 330 crore by promoter Udaykumar Arunkumar Parekh, as per the draft red herring prospectus (DRHP). The company plans a pre-IPO placement of shares aggregating to Rs 104 crore. If the pre-IPO placement is completed, the fresh issue size will be reduced. Advt Proceeds from the fresh issue will be utilised to repay debt, set up two new manufacturing facilities, fund capital expenditure requirements and general corporate Engineering manufactures high-precision engineered components and supplies to global customers across industries like energy, motion control & automation, industrial equipment systems, and other diversified industrial clientele includes Halliburton Energy Services, Suzlon, Oshkosh Aerotech, Weatherford, Lufkin Industries, Oilgear, Donaldson Company, PUSH Industries and Bharat Aerospace Omnitech Engineering will compete with the likes of Azad Engineering, Unimech Aerospace and Manufacturing, PTC Industries, Dynamatic Technologies and MTAR supplied customised high-precision components to over 220 customers across 22 countries, including the US, UAE, Germany, Bulgaria, and shares are proposed to be listed on the BSE and Capital and ICICI Securities are the book-running lead managers, while MUFG Intime India, formerly Link Intime India, is the registrar to the IPO. Join the community of 2M+ industry professionals. Subscribe to Newsletter to get latest insights & analysis in your inbox. All about ETLegalWorld industry right on your smartphone! Download the ETLegalWorld App and get the Realtime updates and Save your favourite articles.

Business Standard

19 minutes ago

• Business Standard

Blend core SIP strategy with dip-buying for tactical market gains

Trading volumes in exchange-traded funds (ETFs) on the National Stock Exchange (NSE) typically spike when the Nifty drops more than 1 per cent, according to media reports. This indicates that savvy investors use such declines as buying opportunities. ETF advantage ETFs are well-suited for dip-buying as they offer intraday liquidity. 'Unlike mutual funds, which are priced only at day-end, ETFs trade in real time, allowing investors to act immediately during sharp intraday declines,' says Arun Patel, founder and partner, Arunasset Investment Services. ETFs have low expense ratios and don't have an exit load. They also provide diversification so that investors don't have to bet on individual stocks. Upside of buying the dip Buying after a market fall enables investors to acquire assets at more attractive valuations. 'Investors get more value for the same investment. It can help lower their average cost of holdings,' says Patel. Behaviourally, the strategy converts volatility into opportunity. 'If done calmly, dip-buying can enhance long-term returns,' says Sanjeev Govila, certified financial planner and chief executive officer, Hum Fauji Initiatives. Further dips possible after buying Dip-buying during bear phases or early in a sell-off can backfire. 'It often amounts to catching a falling knife. Investors may misread temporary bounces or technical signals, only to face deeper declines,' says Patel. 'Markets can continue declining after purchase, testing the investor's patience,' says Govila. If the trend persists, many investors tend to throw in the towel and exit at a loss. Deploying too early leaves investors without dry powder for better opportunities that may come later during the downturn. Evaluate the context Assessing the context is critical. 'Dip-buying is most effective when you can anticipate a turning point — when central banks or governments are likely to step in with supportive measures like rate cuts, liquidity infusions, or fiscal stimulus that may help stabilise the market,' says Patel. Govila suggests the 5-10-15 rule. 'A 5 per cent decline is usually noise, 10 per cent declines deserve attention, while 15 per cent plus declines often present genuine opportunities,' he says. Deployment strategy Avoid overcommitting by setting up a dedicated 'dip fund'. 'Create a separate pool of, say, 5–10 per cent of your total equity allocation, earmarked for such opportunities,' says Govila. Staggered buying reduces regret and improves cost-efficiency. 'Follow the 25-50-25 strategy: Deploy 25 per cent on the first significant decline, 50 per cent if the market falls further, and reserve 25 per cent for extreme scenarios,' he says. Rule-based triggers tied to valuations or index levels can help avoid emotional decisions. Investors should write down their investment rationale before placing such bets. 'Having a written plan, a pre-defined buying ladder, and a long-term mindset rooted in asset quality helps build conviction,' says Ram Medury, founder and chief executive officer, Maxiom Wealth. Be prepared for a long wait Dip-buying can at times require patience. If the dip occurs during a strong uptrend or is triggered by a temporary change in sentiment, recovery can come within months. After the taper tantrum of 2013, the market rebounded strongly within a few quarters as macro stability returned. The Covid-19 crash of March 2020 also saw a swift rebound within a year. If the decline is part of a broader correction or triggered by macroeconomic stress, the wait can be longer. After the 2008 global financial crisis, Indian equities needed nearly two years to recover. 'Historically, markets have taken 12–30 months to recover fully after meaningful corrections. And sector-focused dips may take longer to play out than broad-market dips,' adds Govila. Combine with SIPs Those who buy on dips should not abandon systematic investment plans (SIPs). 'SIP should be the core strategy for retail investors because it is systematic, discipline-driven, and avoids the emotional pitfalls of market timing,' says Medury. SIPs should not be paused during volatile phases. 'Monthly savings done through SIPs provide the power of compounding if done continuously for the long run,' says Swati Saxena, founder and chief executive officer, 4Thoughts Finance. It is best to integrate the two approaches. 'SIPs will provide the benefit of rupee-cost averaging and you can also do opportunistic buying during market downturns,' says Abhishek Kumar, Sebi-registered investment adviser and founder, Saxena suggests routing monthly savings through SIPs and lump-sum investing through dip investing. Key mistakes to avoid Experts say that not every 5 per cent correction is a buying opportunity. Sometimes, those corrections are justified — by lower growth, tighter liquidity, or global shocks. 'Buying prematurely in a falling knife scenario (for example, smallcaps in 2018) can hurt,' says Medury. He suggests using valuation indicators (like P/E relative to historical averages), macro cues (like crude oil spike, GDP growth), and technical support zones to assess the depth of the downturn. Do not engage in dip-buying using leverage, emergency funds, or money needed for short-term goals. Placing heavy bets on a specific sector can also backfire.

Business Standard

33 minutes ago

• Business Standard

Larsen & Toubro lists India's first ESG bonds on NSE

Successfully raises Rs 500 cr under SEBI's newly introduced ESG and sustainability-linked bond framework Larsen & Toubro has listed India's first ESG bonds on the National Stock Exchange (NSE), setting a precedent for a greener and more sustainable financial future in India. The company has successfully raised Rs 500 crore through Non-Convertible Debentures (NCD) at a coupon rate of 6.35% under the Securities and Exchange Board of India's (SEBI) newly introduced ESG and sustainability-linked bond framework. The NCDs, having a three-year maturity period, will mature on June 19, 2028, and the interest would be paid on an annual basis. Issued in partnership with HSBC, who served as the sole lead arranger, this landmark transaction adheres strictly to SEBI's regulatory guidelines introduced on June 5, 2025, aimed at enhancing transparency and accountability among bond issuers. The framework mandates key disclosures, including sustainability objectives, external evaluations such as Second-Party Opinions (SPOs), and continuous post issuance reporting, with clear Key Performance Indicators (KPIs) to measure ESG impact.