On September 19, 2024, the National Stock Exchange (NSE) placed ten stocks under the Futures and Options (F&O) ban. This ban was implemented because these stocks had crossed 95% of the market-wide position limit (MWPL). The stocks impacted by this restriction are:
- Aarti Industries
- Balrampur Chini Mills
- Biocon
- Birlasoft
- GNFC (Gujarat Narmada Valley Fertilizers & Chemicals)
- Granules India
- LIC Housing Finance
- Oracle Financial Services Software
- PNB (Punjab National Bank)
- RBL Bank
The primary reason for these ten stocks being placed under the F&O ban is that they crossed 95% of their market-wide position limit (MWPL). The MWPL is a limit set by the exchange to prevent excessive speculation in a particular stock. When the total positions (both buy and sell) in a stock’s futures and options contracts exceed this limit, the exchange temporarily stops new positions from being created.
This limit helps maintain the stability of the stock market by reducing the risk of price manipulation or extreme volatility. It encourages traders to act cautiously and avoid heavy speculation, especially in stocks that are highly traded.
For investors who hold any of these stocks, it is important to stay updated on the market conditions and watch the stock prices closely. Since they cannot create new F&O positions, those with existing contracts can either exit their positions or wait for the ban to be lifted.
It is also important for investors to understand that this ban is temporary. The NSE reviews the position limits daily and updates the ban list accordingly. Once the overall trading activity in these stocks cools down and falls below the 95% MWPL, the ban will be lifted, and normal trading in futures and options can resume.
If you are planning to trade in the futures and options segment, it’s crucial to keep an eye on the market-wide position limit for the stocks you are interested in. Exceeding this limit can lead to the stock being banned, which might affect your trading strategy. Always make sure to stay informed and be prepared for any restrictions that might come into place.
It’s also a good idea to consult with a financial advisor if you are unsure about how the F&O ban might impact your investments. Professional guidance can help you make the best decisions in such situations and avoid unnecessary risks.
The NSE’s F&O ban on September 19, 2024, for stocks like Aarti Industries, Biocon, and PNB, among others, is aimed at controlling market volatility and protecting investors from excessive speculation. While these stocks are restricted in the F&O segment, trading in the cash market remains unaffected. Investors should monitor the situation closely and consider their options carefully. As always, staying informed and making well-thought-out decisions are key to successful investing.
