MUMBAI: India Index Services & Products (IISL), an NSE group company, today launched a new index to measure the returns generated by market participants lending in the overnight market. Nifty 1D Rate index can be used as a benchmark for funds investing in overnight money market, IISL said in a statement. An overnight market is part of the money market wherein lenders give money to borrowers only for "overnight".The borrower must repay the funds along with interest at the start of business the next day.
"The index uses collateralised borrowing and lending obligation CBLO overnight rate for computation of index values," IISL CEO Mukesh Agarwal said adding that the overnight market in India is the most active component of the money market.
Data provided by IISL showed that the index has given an average return of about 8 per cent per annum.
The base date of the index is January 3, 2011 and base value is 1,000.
The index will be calculated on an end-of-day basis.
"Nifty 1D Rate index will be available for licensing for the launch of financial products such as exchange traded fund and structured products," IISL said.