On October 22, the National Stock Exchange (NSE) banned trading in the futures and options (F&O) segment for 16 stocks. These stocks crossed the 95% market-wide position limit (MWPL), which means they have reached a high level of trading activity. However, these stocks can still be traded in the regular stock market.
Stocks are placed on the F&O ban list when their trading volumes in F&O contracts are too high. Specifically, if the total number of open contracts in a stock reaches 95% of the market-wide position limit, it triggers the ban. This limit is set to protect the stock market from extreme price movements due to heavy speculative activity.
In this case, the NSE identified that these 16 stocks had reached this limit:
- Aarti Industries
- Bandhan Bank
- Birlasoft
- Chambal Fertilisers and Chemicals
- GNFC (Gujarat Narmada Valley Fertilizers & Chemicals)
- Granules India
- Hindustan Copper
- IDFC First Bank
- India Energy Exchange (IEX)
- Indiamart Intermesh
- L&T Finance
- Manappuram Finance
- Piramal Enterprises
- Punjab National Bank (PNB)
- RBL Bank
- Steel Authority of India (SAIL)
The F&O ban restricts the trading of new futures and options contracts on the listed stocks. Traders who had positions before the ban can either close their positions or hold them. However, they cannot open new positions in the F&O segment.
The ban is intended to control excess speculation in the stock market. Speculative trading can cause sharp price changes, which may affect both the stock’s value and the overall market. By placing stocks on the ban list, the NSE ensures that trading activity is kept under control.
If you have investments in any of these 16 stocks, it is important to keep an eye on the market and make informed decisions.
Importance of Staying Updated
The NSE updates the F&O ban list every day. If you are an active trader or investor, it’s essential to stay informed about the latest updates. The inclusion or removal of a stock from the ban list can impact trading strategies. It’s crucial to track the stocks you hold and understand how such bans can affect your investment.
