Exhaustive calculations have been carried out to determine the hedging effectiveness of the 50-security index S&P CNX NIFTY against numerous randomly chosen equally-weighted portfolios of different sizes varying from 1 to 100 of smallcap, midcap and largecap companies as well as many industry indices/sub-indices provided by CMIE. It was observed that the correlation (R2) for various portfolios and indices using monthly returns data on the S&P CNX Nifty vis-a-vis other indices was significantly higher indicating that the S&P CNX Nifty had higher hedging effectiveness.