On Monday, September 16, 2024, the National Stock Exchange (NSE) revealed that seven stocks are now under the Futures and Options (F&O) trading ban. The stocks on the list include Aarti Industries, Balrampur Chini Mills, Bandhan Bank, Chambal Fertilisers and Chemicals, Granules India, Hindustan Copper, and RBL Bank. The reason for this ban is that these stocks have exceeded 95% of the market-wide position limit (MWPL).
The seven stocks mentioned earlier exceeded 95% of the MWPL, which means that a lot of positions (buying and selling agreements) were already taken in the F&O segment. When too many positions are held, the risk of significant price movements increases, and it becomes difficult to manage the market effectively.
To protect investors and prevent further speculation, the NSE imposes a restriction on F&O trading for such stocks. This helps to stabilize the market and reduce the chances of sudden price fluctuations.
On September 16, 2024, the following seven stocks are in the F&O ban list:
- Aarti Industries
- Balrampur Chini Mills
- Bandhan Bank
- Chambal Fertilisers and Chemicals
- Granules India
- Hindustan Copper
- RBL Bank
These stocks have crossed the 95% limit, meaning many traders have already taken positions in their futures and options contracts. The ban will remain in place until their positions come back within the MWPL limits.
For investors holding positions in these stocks, it is important to understand that while F&O trading is restricted, you can still trade these stocks in the cash market. If you were planning to trade these stocks in the F&O segment, you will have to wait until the restriction is lifted.
The NSE regularly updates the F&O ban list, so it’s essential to keep an eye on the changes if you are an active trader. Once the stock’s positions fall below the 95% threshold, it will be removed from the ban list, and trading in futures and options can resume.
This is a precautionary measure to prevent extreme volatility and excessive speculation in the stock. By placing a ban, the exchange ensures that no further positions can be created in the stock’s F&O segment, protecting both individual and institutional investors from potential market risks.
The inclusion of these seven stocks in the F&O ban list on September 16, 2024, is a standard regulatory move by the NSE to maintain market stability. Investors should be aware of the restrictions and adjust their trading strategies accordingly. While F&O trading is not allowed for these stocks at the moment, trading in the cash market remains unaffected. Staying informed about such updates is key to making smart investment decisions in a dynamic market.