SEBI Guidelines Drive Changes for Nifty 50 and Bank Nifty, Aiming to Stabilize India’s F&O Market
The National Stock Exchange of India (NSE) has announced a significant revision in the market lot sizes for derivative contracts on various indices, effective October 28, 2025, as per Circular No. 176/2025 dated October 3, 2025. This move aligns with the Securities and Exchange Board of India (SEBI) guidelines outlined in Circular SEBI/HO/MRD/TPD-1/P/CIR/2024/001 dated December 30, 2024, aiming to maintain a minimum contract value of ₹15-20 lakhs. The revision, based on the average closing prices of September 2025, impacts key indices like Nifty 50 and Bank Nifty, signaling a strategic shift to enhance market stability and curb speculative trading ahead of the festive season.
Key Changes in Lot Sizes
The NSE has adjusted the lot sizes for several underlying indices to reflect current market conditions. The revised lot sizes are as follows:
- Nifty 50 (NIFTY): Increased from 75 to 65 units.
- Nifty Bank (BANKNIFTY): Raised from 35 to 30 units.
- Nifty Financial Services (FINNIFTY): Adjusted from 65 to 60 units.
- Nifty Mid Select (MIDCPNIFTY): Reduced from 140 to 120 units.
Notably, the lot size for Nifty Next 50 (NIFTYNXT50) remains unchanged at 25 units. These revisions are calculated using the average closing price of the underlying indices from September 2025, ensuring the contract value aligns with SEBI’s stipulated range. The changes will apply to all new weekly, monthly, quarterly, and half-yearly contracts starting October 28, 2025, while existing contracts will retain their current lot sizes until their expiry on December 30, 2025.
| Underlying Index | Symbol | Present Market Lot | Revised Market Lot |
|---|---|---|---|
| Nifty 50 | NIFTY | 75 | 65 |
| Nifty Bank | BANKNIFTY | 35 | 30 |
| Nifty Financial Services | FINNIFTY | 65 | 60 |
| Nifty Mid Select | MIDCPNIFTY | 140 | 120 |
| Nifty Next 50 | NIFTYNXT50 | 25 | 25 (Unchanged) |
Values based on NSE Circular No. 176/2025 and September 2025 average closing prices.
Implementation Timeline and Key Notes
The revision will come into effect from October 28, 2025 (Expiry of Day, EOD). Existing lot sizes will remain applicable for weekly and monthly contracts expiring on or before December 30, 2025. For quarterly and half-yearly contracts, the lot size revision will take effect on the 30-December-2025 EOD. Additionally:
- Day spread order books will not be available for certain combinations, such as November 2025–January 2026 and December 2025–February 2026.
- Members are advised to inform clients with positions or those planning new positions in quarterly and half-yearly contracts about the upcoming lot size changes.
A summary for ease of understanding has been provided in the Annexure of the NSE circular, and members are encouraged to download the updated contract files from the NSE extranet server.
Purpose and Market Impact
SEBI’s directive aims to protect investors by increasing the minimum entry barrier for derivatives trading, thereby reducing speculative activity that has historically led to significant retail losses. The higher lot sizes are expected to attract institutional investors, enhancing liquidity and price discovery while discouraging over-leveraged positions by retail traders. With the festive trading season approaching, this revision could lead to a more disciplined market, though it may challenge smaller participants who will need to adjust to the increased capital requirements.
The unchanged lot size for Nifty Next 50 suggests a strategic focus on maintaining accessibility for mid-cap-focused investors, while the reductions in other indices reflect a recalibration based on their current valuation levels. Market analysts anticipate a potential 10-15% shift in trading volumes toward stock F&O or ETFs as retail traders adapt.
Conclusion
The NSE’s revision of lot sizes for index derivatives, effective October 28, 2025, marks a pivotal step in aligning India’s F&O market with SEBI’s long-term vision of stability and inclusivity. As traders prepare for the transition, staying updated via NSE circulars and broker advisories will be crucial. With the market poised for festive volatility, this change could reshape strategies, favoring institutional depth over retail speculation in the coming months.
