Several stocks, including Steel Authority of India (SAIL), India Cements, and Hindustan Copper, are still under a ban on the National Stock Exchange’s (NSE) Futures and Options (F&O) segment today, June 13th, 2024. This means you cannot buy or sell new futures or options contracts for these companies.
This ban is triggered when a stock’s level of trading activity reaches a certain limit. This cap is known as the Market-Wide Position Limit (MWPL). It’s like a safety measure to prevent excessive speculation and volatility in a particular stock’s F&O contracts.
If you already hold F&O contracts for these stocks, you can still square off your existing positions, which means closing out your trades. However, you cannot open any new F&O contracts for them until the ban is lifted.
The good news is that you can still trade these stocks in the cash market, where you buy or sell actual shares of the company.
Which Stocks Are Affected?
Here’s a list of the companies currently under the F&O ban:
- Steel Authority of India (SAIL)
- India Cements
- Hindustan Copper
- Balrampur Chini Mills
The ban will be lifted automatically once the open interest in these stocks’ F&O contracts falls below 80% of the MWPL. Open interest refers to the total number of outstanding F&O contracts that haven’t been squared off yet.
If you’re interested in these stocks, you can still consider investing in them through the cash market. However, it’s important to do your own research and understand the company’s fundamentals before making any investment decisions.
Impact on Stock Prices
The F&O ban itself doesn’t necessarily affect a stock’s price directly. However, the high level of trading activity that triggered the ban might indicate increased volatility in the stock’s price. So, it’s wise to be cautious and closely monitor the stock’s performance before investing.
Overall, the F&O ban is a temporary measure to ensure market stability. Investors should stay informed and make well-considered decisions based on their own investment goals and risk tolerance.