The National Stock Exchange (NSE) has restricted trading in the futures and options (F&O) segment for five specific stocks today, May 29th, 2024. These stocks include Aditya Birla Fashion and Retail, Biocon, Hindustan Copper, Vodafone Idea, and Piramal Enterprises.
Why the Ban?
The NSE restricts F&O trading on a stock when a situation called “high open interest” occurs. Open interest refers to the number of outstanding contracts that haven’t been settled yet.
When open interest for a stock’s F&O contracts crosses a certain limit, it indicates a potential for excessive speculation or volatility in the stock’s price. To manage this risk and ensure a stable market, the NSE puts the stock on an F&O ban.
While trading in F&O contracts for these five stocks is currently unavailable, investors can still buy and sell shares of these companies in the regular “cash market” section of the stock exchange. The cash market allows for regular buying and selling of company shares at the current market price.
The F&O ban is temporary and will be lifted once the open interest for these stocks reduces below a specific level set by the NSE. This typically happens when some existing contracts are settled or expire.
Here’s a quick breakdown of the five companies affected by the F&O ban:
- Aditya Birla Fashion and Retail (ABFRL)
- Biocon
- Hindustan Copper
- Vodafone Idea
- Piramal Enterprises
What should investors do?
If you hold shares of any of these companies, you can continue to hold them or sell them in the cash market. The F&O ban only affects trading in futures and options contracts.
For investors interested in trading these stocks using F&O contracts, it’s best to monitor the NSE website for updates on when the ban is lifted. You can also seek personalized investment advice from a financial advisor.