Mumbai: The National Stock Exchange (NSE) has decided to remove 50 stocks from the futures and options, or F&O, market after the April series. Existing contracts for May and June would continue to be available for trading until their expiry.
The move comes after the Securities and Exchange Board of India, or Sebi, the market regulator, tightened criteria for inclusion in the F&O market to ensure only large, liquid stocks remain part of it. Once a stock is excluded from the F&O list, it shall not be considered for reinclusion for a period of one year.
Good step? The NSE building in Mumbai. Many experts say that despite short-term pain, the decision would prove to be positive in the long term. Abhijit Bhatlekar / Mint
Many experts say that despite short-term pain, the move would prove to be positive in the long term.
Most of these 50 stocks took a beating in today’s trading. Most of the positions in these stocks had been created recently, when the market rallied about 30% and many had built long positions in single-stock futures. Prominent losers included stocks such as Reliance Industrial Infrastructure Ltd, which was down 13%, Alok Industries Ltd, which fell 7%, and 3i Infotech Ltd, which retreated 11%.
Some of the recent gainers also cooled off with Gitanjali Gems Ltd losing 11% and Srei Finance Ltd declining 10%. In most cases, prices fell more in the futures market than in the spot market, indicating the pressure on long positions.
What’s interesting is that most of these stocks had outperformed the market over the last one month. For instance, Reliance Industries Infrastructure rallied 158% in three trading sessions earlier in the month.
Alok Industries saw a big build-up and even crossed the 95% position limit mark and IRB Infrastructure Developers Ltd saw a big build-up of 6.4 million shares in four days.