Several stocks, including Hindustan Copper, Metropolis Healthcare, and Punjab National Bank (PNB), are unavailable for trading in the Futures & Options (F&O) segment on the National Stock Exchange (NSE) today, May 23rd, 2024. This means options contracts and futures contracts for these stocks cannot be bought or sold.
Why the Ban?
The NSE puts certain stocks on this ban list when a situation called high “open interest” occurs. Open interest refers to the number of unresolved contracts (futures or options) that haven’t been squared off yet. Basically, a lot of traders are holding onto these contracts, and the exchange wants to regulate activity to prevent excessive volatility.
The exchange sets a limit, and if the open interest for a particular stock crosses 95% of that limit, trading in F&O contracts is halted. This “cooling off” period helps to manage risk and prevent sharp price movements.
What Stocks Are Affected?
Here are some of the stocks included in today’s NSE F&O ban list:
- Hindustan Copper
- Metropolis Healthcare
- Punjab National Bank (PNB)
- Aditya Birla Capital
- Vodafone Idea
- Balrampur Chini Mills
- Bandhan Bank
- Biocon
- Indian Cements
- National Aluminium
- Piramal Enterprises
- Zee Entertainment Enterprises
What Can You Do With These Stocks?
Even though F&O trading is restricted, you can still buy or sell these stocks in the regular “cash market” on the NSE. The cash market allows you to purchase shares directly, which can be held for investment or sold later for a profit (or loss).
When Will the Ban Be Lifted?
The F&O ban will be removed from a stock when the open interest level falls below 80% of the exchange’s limit. This typically happens over time as existing contracts expire or traders close their positions.
Impact on Investors
This ban primarily affects traders who deal in options and futures contracts. Investors who prefer buying and holding shares in the cash market are not impacted. However, the ban can influence overall market sentiment and potentially affect the stock price in the cash market as well.
Important to Note
- The F&O ban is a temporary measure and doesn’t necessarily indicate any underlying problems with the companies themselves.
- The ban is a mechanism to manage risk and ensure orderly trading in the F&O segment.
- Investors can still trade these stocks in the cash market as usual.
Stay Informed
The NSE updates the F&O ban list daily. You can find the latest list on the NSE website or through financial news platforms. This information can be helpful for investors and traders to make informed decisions.