On September 4, the National Stock Exchange (NSE) added three stocks Aditya Birla Fashion & Retail, Balrampur Chini Mills, and Hindustan Copper to its Futures and Options (F&O) ban list. This occurred because these stocks exceeded 95% of the market-wide position limit (MWPL) in the derivatives segment.
These stocks crossed the 95% threshold of their MWPL, which is the maximum number of contracts allowed to be open at any time. When this limit is exceeded, the NSE imposes a ban to prevent further speculative trading.
Investors who already hold positions in these stocks’ futures or options can continue to trade them, but no new positions can be created while the ban is in effect. However, trading in the cash market remains unaffected.
The NSE imposes an F&O ban to control excessive price volatility and ensure market stability. Heavy trading in the derivatives market can lead to sharp price swings, which the ban aims to mitigate.
Investors should stay updated on the F&O ban status, as it is reviewed daily by the NSE. While the ban might impact trading in the short term, long-term investors should consider broader market factors before making any decisions.
The F&O ban on these stocks is a temporary measure to maintain stability. Investors should stay informed, evaluate their strategies, and make decisions based on a full understanding of the market situation.