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
Central Depository Services Ltd
CDSL is India’s largest central securities depository by the number of demat accounts. Established in 1999 and headquartered in Mumbai, it provides secure, electronic holding and transfer of securities, serving investors, exchanges, and depository participants. CDSL is a Market Infrastructure Institution crucial to the capital market, facilitating dematerialization and efficient securities transactions.
Indian Energy Exchange Ltd
IEX is India’s leading electricity trading platform, providing a marketplace for buyers and sellers of electricity to trade in various contracts, including day-ahead and term-ahead markets. It plays a key role in India’s power sector, enhancing transparency and efficiency in electricity procurement and sales.
Aditya Birla Fashion and Retail Ltd
ABFRL is one of India’s largest fashion and retail companies, offering clothing, accessories, and footwear under brands like Pantaloons, Louis Philippe, and Van Heusen. It is known for bringing global fashion trends to Indian consumers and operates a vast network of retail outlets across the country.
Chambal Fertilisers and Chemicals Ltd
Chambal Fertilisers is a major producer of chemical fertilizers such as urea and phosphates, supporting India’s agricultural sector. The company is committed to enhancing farm productivity and sustainability while focusing on environmental responsibility.
Hindustan Copper Ltd
Hindustan Copper is a government-owned enterprise specializing in copper mining and processing. It provides high-quality copper products for industries like electronics, construction, and electrical equipment, and is recognized for its sustainable mining practices.
Indian Renewable Energy Development Agency Ltd
IREDA is a government-owned non-banking financial company (NBFC) focused on financing renewable energy and energy efficiency projects. It supports India’s transition to clean energy by offering loans and guarantees for green projects, with a mission to help achieve national renewable energy targets.
RBL Bank Ltd
RBL Bank is a private sector bank in India offering a wide range of banking and financial services, including retail banking, corporate banking, and treasury operations. It is known for its innovative products and customer-centric approach.
Titagarh Rail Systems Ltd
Titagarh Rail Systems is a leading manufacturer of rolling stock, including freight wagons, passenger coaches, and metro trains. The company operates in both India and Italy, and is expanding into shipbuilding and defense equipment, leveraging government contracts under “Make in India” initiatives.
Written by Sridhar J
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