Basket Trades involve the simultaneous purchase or sale of a group (basket) of securities—typically to replicate a specific index, execute a sector rotation strategy, or rebalance a portfolio in one coordinated transaction. Institutional investors and index fund managers extensively use basket trades to efficiently manage large portfolios, minimise tracking error against benchmark indices, and reduce market impact. In India, basket trades are executed through program trading systems and are particularly relevant for ETF market makers who need to create or redeem ETF units in exchange for the underlying basket of securities.
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