On Monday evening, stocks of PVR were put on the F&O ban list by the National Stock Exchange (NSE). So, the company cannot carry on trading in Futures and Options on Tuesday, 29 March 2022. Keep reading to learn about the companies that NSE banned and its reason!
Details of the F&O Ban
Currently, three stocks, namely PVR Cinemas, Sun TV Network and Vodafone Idea Limited, are under the National Stock Exchange’s ban, prohibiting them in the F&O sector. The reason behind it is that there was an excess of 95% in the market-wide position limit. In return, the exchange added one new stock. This news, along with the latest update of PVR Cinemas merging with its competitor INOX Leisure dropped L&T Finance Holdings, Indiabulls Housing Finance, and SAIL from the F&O ban list.
Additional Information Shared by NSE
After banning, NSE added that all members and clients must know trading will only occur through derivative contracts of a particular security. It will be to decrease their position via offsetting positions. Moreover, NSE also shared that it will attract disciplinary action and pre-decided penalties if any position increases. The stocks under the NSE F&O ban cannot attract any new position in the sector as per the contract. So, one must abide by the rules to avoid a ban. For example, companies must not cross the market-wide position limit set by the National Stock Exchange, mentioning the maximum contract number that one can open at a time (Open Interest). Therefore, NSE bans those stocks whose open interest crosses 95% of the market-wide position limit (MWPL). If companies want to carry out normal trading, they have to make sure their aggregate open interest across the stock exchange must be 80% or below as per NSE.
Know About the Companies – PVR Cinemas, Vodafone Idea Limited & Sun TV
PVR Cinemas is a premium film channel and one of India’s largest movie theatre chains, having its headquarters in Gurgaon. It operates 181 properties across 73 cities and owns around 871 screens in India. Vodafone Idea Limited is a recognised Indian telecom operator and a part of the Aditya Birla Group & Vodafone Group partnership. It provides a wide range of services, including enterprise offerings, mobile payments, and IoT. In addition, they provide accessibility through digital channels, entertainment and other enterprise offerings. Also, up till now, it has built its broadband networks in 3,40,000 sites distributed over 1.7 million retail outlets. Incorporated in 1993, Sun TV Network is the number one Tamil-language entertainment channel and one of India’s conglomerates too. It is currently entertaining 95 million households and is also accessible from Canada, the USA, South Africa, Europe, Malaysia, Singapore, New Zealand, and Australia.
Getting banned under the F&O sector means the company can no longer trade its stocks and is also not allowed to gain contemporary positions in the exchange. So, now until the ban ends, members can only trade by-product contracts to lower their position and not more.
Frequently Asked Questions
1. What is F&O?
F&O refers to Futures and Options, which are both derivative products. Under the Futures contract, one can buy and sell stocks and other assets on a specific date and fixed price. However, in the Options contract, there is no fixed date or price for investors. They can choose to sell and buy a stock at a specific date and at a fixed price.
2. When was Vodafone Idea Limited founded?
Vodafone Idea Limited was founded on 31 August 2018, having its headquarters in Gandhinagar and Mumbai.
3. Who is the current CEO of Sun TV Network?
K. Vijaykumar is the current CEO of Sun TV Network from 12 July 2011.
Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.