Futures and Options (F&O) are financial contracts that allow traders to buy or sell assets like stocks, commodities, or indices at a predetermined price on a future date.
F&O contracts provide traders and investors with an opportunity to hedge, speculate, and leverage their positions in the market. However, the exchanges periodically review and reassess the eligibility of stocks for inclusion in F&O trading.
The decision to exclude a stock from F&O contracts can be based on various factors, including low liquidity, high volatility, or non-compliance with regulatory requirements.
Demerits for stock on Exclusion
When a stock is excluded from the F&O segment, here are the demerits of the exclusion
- Reduced Liquidity: F&O contracts typically enhance liquidity in a stock. Exclusion can lead to decreased trading volumes, making it harder for investors to buy or sell the stock easily.
- Lower Market Interest: Without the ability to trade F&O contracts, the stock may attract less attention from institutional investors and traders who use these contracts for hedging or speculation.
- Price Volatility: The absence of F&O trading can lead to higher price volatility, as the stock may face less market depth and fewer players engaging in trades.
- Limited Hedging Options: Investors and traders may lose the ability to hedge their positions using F&O contracts, which could result in greater risk exposure.
- Impact on Stock Performance: F&O exclusion can lead to a reduction in overall investor confidence, potentially causing a dip in the stock’s performance.
Here is the List of stocks to watch out for:
Aditya Birla Fashion and Retail Ltd
Aditya Birla Fashion and Retail Ltd (ABFRL) is a leading Indian fashion retailer with a wide portfolio of brands, including Pantaloons, Louis Philippe, Van Heusen, Allen Solly, and Peter England. It operates across masstige, value, ethnic, luxury, and digital-first segments, serving diverse consumer needs.
Birlasoft Ltd
Birlasoft Ltd is an IT services company under the CK Birla Group, specializing in digital transformation, cloud, enterprise solutions, and IT consulting. It serves clients across sectors like manufacturing, banking, insurance, and healthcare, and it delivers services globally, focusing on innovation and customer-centric solutions.
Central Depository Services Ltd
CDSL is one of India’s two main securities depositories, enabling electronic holding and transfer of securities such as shares and bonds. It provides depository services to investors, stockbrokers, and financial institutions, ensuring safe and efficient settlement of trades. It plays a key role in India’s capital markets infrastructure and is regulated by SEBI.
Chambal Fertilisers and Chemicals Ltd
Chambal Fertilisers is one of India’s largest private sector fertilizer producers, primarily manufacturing urea. The company serves millions of farmers and operates modern plants in Rajasthan. It also deals in agri-inputs like pesticides and seeds, contributing to India’s agricultural productivity.
HUDCO Ltd
Housing and Urban Development Corporation Ltd (HUDCO) is a government-owned company specializing in housing finance and urban infrastructure development. It provides loans for housing, water supply, roads, and social infrastructure projects, and plays a significant role in supporting affordable housing and urban development across India.
Indian Renewable Energy Development Agency (IREDA) Ltd
IREDA is a government-owned financial institution dedicated to promoting renewable energy and energy efficiency projects in India. It offers financing and advisory services for wind, solar, biomass, and hydro projects. It supports India’s clean energy transition and sustainable development goals.
Manappuram Finance Ltd
Manappuram Finance Ltd is a leading non-banking financial company (NBFC) in India, best known for its gold loan business. It also offers microfinance, vehicle loans, and housing finance. With a wide branch network, it serves millions of customers, especially in rural and semi-urban areas.
RBL Bank Ltd
RBL Bank Ltd is a private sector bank in India, offering a range of banking and financial services to individuals, businesses, and corporates. Its services include retail banking, corporate banking, credit cards, and treasury operations, and it has a growing national presence with a focus on digital innovation.
Titagarh Rail Systems Ltd
Titagarh Rail Systems Ltd (formerly Titagarh Wagons) is a leading manufacturer of railway wagons, coaches, and metro trains in India. The company also exports to international markets and is involved in shipbuilding and defence engineering, and it is known for its technological expertise and strong order book in the rail sector.
Written by Sridhar J
Disclaimer
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