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
Apollo Tyres Limited
Apollo Tyres is a leading manufacturer of tires for various segments, including passenger cars, commercial vehicles, and two-wheelers. The company operates globally with manufacturing facilities in India, Europe, and the Middle East, known for its strong brand and innovation in tire technology.
Deepak Nitrite Limited
Deepak Nitrite is a prominent chemical manufacturing company in India, specializing in the production of basic chemicals, intermediates, and performance products. The company serves a wide range of industries, including agriculture, automotive, and pharmaceuticals, with a strong focus on sustainability.
Escorts Kubota Limited
Escorts Kubota is a major player in the Indian engineering sector, known for its tractors, agricultural machinery, and construction equipment. The company has a strong market presence in India and internationally, offering innovative solutions for farming and infrastructure development.
MRF Limited
MRF (Madras Rubber Factory) is one of India’s largest tire manufacturers, renowned for producing tires for automobiles, trucks, and two-wheelers. The company is also involved in the production of rubber products and has a significant international footprint in the tire industry.
The Ramco Cements Limited
The Ramco Cements is a leading cement manufacturer in India, known for its high-quality products and extensive distribution network. The company has a strong presence in South India and focuses on sustainable manufacturing practices and innovations in the construction sector.
Written by Sridhar J
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