The National Stock Exchange (NSE) has announced that a total of 12 stocks will be placed under the ban for trade in the futures and options (F&O) segment on Wednesday, August 23, 2023. This decision comes as these securities have crossed the threshold of 95% of the market-wide position limit (MWPL) in the F&O segment, prompting the NSE to enforce trading restrictions. While these stocks will remain available for trading in the cash market, they are under the F&O ban period as per the NSE’s regulatory guidelines.
List of Stocks Under F&O Ban
The 12 stocks that have been put under the F&O ban list for August 23 are as follows:
- Steel Authority of India (SAIL)
- Bharat Heavy Electricals Limited (BHEL)
- Escorts Kubota
- Metropolis Healthcare Ltd
- Chambal Fertilizers and Chemicals
- Gujarat Narmada Valley Fertilizers And Chemicals Limited
- Delta Corp
- Hindustan Copper
- India Cements
- Indiabulls Housing Finance
- Punjab National Bank
- Manappuram Finance
- Zee Entertainment Enterprises Ltd
Rationale for F&O Ban
The decision to place these securities under the F&O ban period is in accordance with the NSE‘s regulations. When the derivative contracts for these stocks cross 95% of the market-wide position limit, the NSE takes this step to prevent excessive speculation and ensure market stability. During this period, traders and investors can only decrease their positions through offsetting transactions. Any attempts to increase open positions in these stocks will lead to appropriate penal and disciplinary actions.
No Fresh Positions Allowed
It’s important to note that while these stocks are under the F&O ban period, no fresh positions are allowed in the F&O contracts for these specific securities. Traders cannot initiate new positions in these stocks through the F&O segment during this time. This restriction is designed to prevent further speculative activity and promote a more controlled trading environment.
The announcement of the F&O ban list comes against the backdrop of a relatively flat trading session on August 22. The domestic equity benchmarks, Sensex and Nifty, ended the day with marginal gains due to ongoing concerns over US interest rates and China‘s economic health. While market sentiment was cautious, the mid-cap index managed to rally to a fresh record on the basis of brighter domestic prospects.
The NSE’s decision to place certain stocks under the F&O ban for trade is a regulatory measure aimed at maintaining a balanced and stable trading environment. By enforcing trading restrictions when the market-wide position limit is exceeded, the NSE seeks to prevent undue speculation and promote responsible trading practices. Market participants should be aware of these restrictions and adjust their trading strategies accordingly to ensure compliance with the regulations.
Disclaimer: The information provided here is for educational purposes only and should not be considered financial advice. Always conduct thorough research and consider consulting a financial professional before engaging in algorithmic trading.