What is special about Nifty for use in index derivatives?
The methodology created for the NSE-50 index explicitly isolates a set of securities for which the market impact cost is minimised when buying or selling the entire index portfolio. This makes Nifty well-suited to applications such as index funds, index derivatives, etc. Nifty has a explicit methodology for regular maintenance of the index set. It is successful at expressing the market risk inherent in a wide variety of portfolios in the country.