Stocks going out of F&O segment

June 16 Forty of the 50 stock that will be excluded from the derivatives segment following the F&O expiry this month on June 25 have fared badly on the exchanges during the last one-week period.

These stocks fell between 1 per cent and 14 per cent over the last seven days.

Illiquid stocks

The National Stock Exchange had announced in late April that it will exclude 50 stocks from the F&O segment after the June 25 expiry.

Some of the stocks that would be excluded are Balaji Telefilms, Central Bank of India, Edelweiss Capital, Gitanjali Gems, Havell’s India, HCL Infosystems, Jet Airways, MRF, NDTV, Network 18 Fincap, Peninsula Land, Reliance Industrial Infrastructure, TVS Motors and Wockhardt.

Illiquid counters

“These scrips have been excluded mainly because they are highly illiquid. The bid and ask price or the impact cost of most of these scrips is quite high, this signifies illiquidity. And also the transaction cost on these scrips is high,” said Mr Alex Mathew, Head of Research at Geojit BNP Paribas Financial Services.

Marketmen said these shares have fallen partly due to their exclusion from the F&O segment and partly due to the fact that the market itself has fallen over the last week.

Among the stocks that have fallen are 3i Infotech, Balaji Telefilms, Bombay Dyeing, Edelweiss Capital, Jet Airways, LMW, NDTV, Reliance Industrial Infrastructure, MindTree, TVS Motors and Gitanjali Gems.

Among the 10 stocks that rose despite their exclusion from F&O are Strides Acrolab, Torrent Power, NIIT, Peninsula Land, Everonn, Amtek Auto and Bata India.

NSE has been tweaking the F&O list for a while now. Some time ago, the stock exchange had announced a list of 20 stocks that were to be excluded from the F&O segment.

Marketmen said such fine-tuning will only facilitate smoother trading.

“It is good to take out the illiquid stocks from the F&O segment, as there will be more liquidity in the market. It is difficult to trade if liquidity is low. Also, big players cannot manipulate the market if the illiquid counters are excluded,” said Mr Manish Kumar, Research Analyst-Derivates at Pinc Research.