NSE reduces F&O lot size of Nifty50 contracts to 50 from 75; halves market lot size for 40 other stocks

The National Stock Exchange of India on March 31 decided to cut down the futures & options lot size by 50 percent for 40 stocks. The exchange also reduced the lot size of Nifty50 contracts.

State Bank of India, Shree Cement, Tata Motors, Tata Power, Tech Mahindra, Titan Company, UltraTech Cement, Wipro, Adani Enterprises, Apollo Hospitals Enterprise, Ashok Leyland, Bajaj Finance, BHEL, Cipla, Grasim Industries, Hindalco Industries, Jindal Steel & Power, Mahindra & Mahindra, Mindtree and SAIL are the among 40 stocks that will see the revision in market lot size.

In case of Bajaj Finserv and Coforge, the market lot size has been reduced to 75 from 125 and to 200 from 375, respectively.

The market lot size has left unchanged for futures & options contracts of 114 stocks, including ACC, Amara Raja Batteries, Asian Paints, Aurobindo Pharma, Axis Bank, Bajaj Auto, Bandhan Bank, Bata India, Bharti Airtel, BPCL, Cadila Healthcare, Coal India, Dabur India, Divis Labs, DLF, Eicher Motors, GAIL India, Godrej Properties, HCL Technologies, HDFC, HDFC Bank, Hero MotoCorp, HUL, ICICI Bank, InterGlobe Aviation, IndusInd Bank, Infosys, IRCTC, ITC, L&T and Kotak Mahindra Bank.

"A welcome move from exchange which will proportionately reduce the burden of upfront margins which is pinching traders in the volatile market and further one can expect to see a greater participation of retail traders," Prashanth Tapse, AVP Research at Mehta Group told Moneycontrol.

"It will be interesting to see whether the revised market lot size will revive interest in Nifty Futures. Reason behind this move is just periodic review and nothing related risk management," he said.

Moreover, the exchange has reduced the lot size for the Nifty50's futures & options contracts to 50 from 75, while the lot size has been unchanged for Nifty Bank and Nifty Financial Services at 25 and 40 respectively.

The exchange said only the far month contract - July 2021 expiry contracts - will be revised for market lots.

"Contracts with maturity of May 2021 and June 2021 would continue to have the existing market lots. All subsequent contracts - July 2021 expiry and beyond - will have revised market lots," it added.

The day spread order book will not be available for the combination contract of June 2021 - July 2021 expiry in case of stocks, and May 2021 - July 2021 and June 2021 - July 2021 expiries in case of Nifty50, said the NSE.

For the purpose of the computation, the exchange has taken the average of closing price of underlying for one month period of March 1 to March 31, 2021.

In case of Nifty50, the contracts with August 2021 weekly expiry & beyond will have revised market lots, and the lot size of all existing Nifty long term options contracts (having expiry greater than 3 months) will be revised from 75 to 50 after expiry of June 2021 contracts (i.e. June 25, 2021), said the exchange.

All the changes will be effective from April 30, 2021.

Meanwhile, "in order to encourage active participation in quarterly options contracts on Nifty Bank Index, it has been decided that no transaction charges will be levied on the trades done in quarterly options contracts on Nifty Bank Index in future & options segment of the exchange from April 1, 2021 till September 30, 2021," said the NSE.

The exchange had announced the introduction of trading in quarterly options contracts on Nifty Bank Index in future & options segment from October 30, 2020.