Eleven stocks have been placed on the Futures and Options ban list by the NSE for May 24, 2024. The stocks affected include Aditya Birla Capital, Balrampur Chini Mills, Bandhan Bank, Hindustan Copper, Indian Energy Exchange, India Cements, Metropolis Healthcare, National Aluminium, Piramal Enterprises, Punjab National Bank, and Zee Entertainment Enterprises.
These stocks have been banned under the F&O segment because they have crossed 95% of the market-wide position limit. This limit is a threshold set to control excessive speculation and ensure market stability. When a stock exceeds this limit, it is placed under the ban period, preventing traders from taking new positions in F&O contracts. This restriction, however, does not apply to the cash market, where these stocks remain available for trading.
The NSE updates the F&O ban list daily, reflecting the dynamic nature of the market and the ongoing monitoring required to maintain balance and mitigate risks. The ban aims to curb speculative trading practices that can lead to market volatility and ensure a fair trading environment for all participants.
For investors holding positions in the banned stocks, the directive is clear: all trading in the derivative contracts of these securities must aim to reduce positions through offsetting trades. Any attempt to increase open positions in these contracts will attract penal and disciplinary actions from the exchange. This policy is designed to prevent traders from exploiting the high leverage available in the F&O segment and to protect the integrity of the market.
On May 23, 2024, the benchmark indices, Sensex and Nifty, both reached new all-time highs, driven by positive market sentiment and strong corporate earnings. The BSE Sensex closed at a record peak of 75,418.04 points, gaining 1.61% or 1,196.98 points. It even touched an intra-day high of 75,499.91 points. Similarly, the NSE Nifty rose by 1.64%, ending the day at 22,967.65 points, with an intra-day peak of 22,993.60 points.
This rally in the stock market has significantly boosted investor wealth, adding ₹4.28 lakh crore in a single day. The surge is attributed to several factors, including robust economic data, strong corporate earnings, and positive global cues. Investors are optimistic about the future, driving the market to unprecedented levels.
The F&O ban serves as a reminder of the importance of maintaining a balanced approach to trading. While the market’s upward momentum is encouraging, the restrictions on these eleven stocks highlight the need for caution and responsible trading practices.
