The National Stock Exchange (NSE) has banned two stocks from trading in the Futures and Options (F&O) segment for today, Tuesday, September 3. The two stocks are Balrampur Chini Mills and Hindustan Copper. This ban has been implemented because these stocks have exceeded 95% of their Market-Wide Position Limit (MWPL).
A stock is placed on the F&O ban list when its derivative contracts cross 95% of the Market-Wide Position Limit (MWPL). The MWPL is a limit set by the exchange to prevent excessive speculation in a stock. It represents the maximum number of contracts that can be open for a particular stock in the F&O segment. When this limit is breached, the stock is put on the ban list to help control its volatility and protect investors.
If a stock is on the F&O ban list, traders cannot take any fresh positions in the futures and options contracts of that stock. However, they can still trade the stock in the cash market. Traders who already hold positions in the F&O segment can only close their positions. They cannot add any new ones until the ban is lifted.
Today’s F&O ban on Balrampur Chini Mills and Hindustan Copper is a regular measure by the NSE to control speculation and maintain market stability. Investors are advised to keep an eye on these stocks and the F&O ban list to make informed trading decisions. While these stocks are restricted in the derivatives market, they remain available for trading in the cash market.
As always, staying updated with daily market changes and understanding the reasons behind such measures can help investors navigate the stock market more effectively.