On December 9, the National Stock Exchange (NSE) updated its futures and options (F&O) ban list, adding four stocks. These stocks are:
- PVR Inox
- Manappuram Finance
- Granules India
- RBL Bank
The F&O ban is implemented when a stock’s open interest crosses 95% of its market-wide position limit (MWPL). Open interest represents the total count of active contracts in the futures and options market. When this limit is exceeded, it signals excessive speculation in the stock.
The NSE imposes this restriction to reduce volatility and control speculation in the derivatives market. During the F&O ban, creating new contracts for these stocks is not allowed. However, traders can still square off their existing positions.
The F&O ban only affects trading in the derivatives market. These stocks remain available for buying and selling in the cash market. However, being on the ban list can lead to increased price volatility as traders cannot hedge their positions using futures or options contracts.
The addition of PVR Inox, Manappuram Finance, Granules India, and RBL Bank to the NSE’s F&O ban list is a key development for traders and investors. Staying informed about such changes is essential to managing investment risks. If you hold any of these stocks, keep an eye on the latest updates and market movements to make the best decisions.
