New SEBI F&O criteria implemented; 23 stocks at risk of exclusion

According to the new guidelines, stocks in the F&O segment that fail to meet the criteria for three consecutive months on a rolling basis will be removed. The guidelines also state that no new contracts will be issued for these stocks once they exit the F&O segment.

SEBI has implemented new eligibility criteria for stocks in the Futures and Options (F&O) segment. The criteria, according to a note from IIFL is largely unchanged from the proposal released on June 28, 2024, and requires stock exchanges to adjust their rules and regulations accordingly.

The circular is effective immediately, with a six-month gestation period for existing stocks to meet the new norms.

According to the new guidelines, stocks in the F&O segment that fail to meet the criteria for three consecutive months on a rolling basis will be removed. The guidelines also state that no new contracts will be issued for these stocks once they exit the F&O segment.

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According to SEBI's circular, the stock's Median Quarter Sigma Order Size (MQSOS) must now be at least Rs 75 lakh, up from the previous Rs 25 lakh. Additionally, the Market Wide Position Limit (MWPL) has been increased to at least Rs 1,500 crore from Rs 500 crore. The stock's Average Daily Delivery Value in the cash market must now be at least Rs 35 crore, up from Rs 10 crore, due to a significant increase in average daily delivery value.

A total of 23 stocks are potential candidates for exclusion from the F&O segment based on the new criteria, according to the IIFL Alternative's note. These include Laurus Labs (open interest of Rs 1,166 crore), Ramco Cements (Rs 910 crore), Deepak Nitrite (Rs 695 crore), Atul Ltd (Rs 656 crore), Torrent Pharmaceuticals (Rs 652 crore), and Chambal Fertilizers (Rs 640 crore). Other potential exclusions are Gujarat Gas, Coromandel International, Granules India, Sun TV Network, Syngene International, City Union Bank, Gujarat Narmada Valley Fertilizers & Chemicals (GNFC), Can Fin Homes, Bata India, Dr. Lal PathLabs, Abbott India, United Breweries (UBL), IPCA Laboratories, Metropolis Healthcare, Indiamart Intermesh, Mahanagar Gas (MGL), and JK Cement.

Analysts at Nuvama estimate that around 18 stocks could be at risk for exclusion. This includes Abbott India, Sun TV Network, Metropolis Healthcare, Ipca Labs, Gujarat Gas, Granules India, Can Fin Homes, Mahanagar Gas, Atul, GNFC, Indiamart Intermesh, Bata India, United Breweries, Syngene, City Union Bank, IDFC, Coromandel International, and Dr. Lal Pathlabs.

On the other hand, stocks such as Zomato, Adani Green, Jio Financial, DMart, and Tata Technologies could be included.

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