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Start Learning → Browse All Articles →Hedging With Index Futures is something every serious Indian trader and investor should understand clearly. Part of our Futures Trading: The Complete Guide series.
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Beyond speculation, index futures are commonly used to protect an existing equity portfolio during periods of expected weakness, without needing to sell individual holdings.
Shorting index futures against a long equity portfolio offsets losses in the portfolio if the market falls, since gains on the short futures position can help balance the decline.
The hedge size depends on how closely your portfolio tracks the index and how much protection you want — a partial hedge reduces risk without fully neutralising potential upside.
Hedging is more common ahead of known uncertain events — major elections, global central bank decisions — where downside risk feels elevated but selling the underlying portfolio isn’t desirable.
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