Two Additions to the F&O list from Jan-22 Contracts
In a circular issued late on 25th November, the NSE announced the addition of 2 stocks to the list of eligible futures and options trading. The two companies are Aditya Birla Capital (ABCAPITAL) and Honeywell Automation India (HONAUT). These stocks have been identified based on their meeting the required criteria for inclusion in F&O.
These additions to the F&O list will be made after the close of trading on 30th December, which is the expiry day for the December F&O contracts.
These contracts on the 2 stocks as mentioned above will be introduced effective from trading on 31st December, for the January 2022 F&O contracts onwards.
The inclusion of these two stocks will be subject to the fulfilment of the eligibility criteria of Quarter Sigma computation for the December 2021 cycle. Other details of the F&O contracts like the lot size, the quantity freeze limits and the option strikes for options on these stock contracts will be communicated by the NSE on 30th December, 2021.
Currently, there are 188 stocks in the F&O list and 3 indices. Each stock has a near-month contract, mid-month contract and a far month contract available in F&O at any point of time.
With the addition of Honeywell Automation and Aditya Birla Capital, the total number of stocks in the F&O list will go up to 190, apart from the 3 indices. The inclusion of the stocks in the F&O eligible list proffers some distinct advantages.
1) It offers greater liquidity due to the higher volumes that F&O attracts in India as compared to the cash market
2) It contributes to cash market volumes in the stocks as a common strategy adopted by the institutional investors and proprietary traders is the cash-future arbitrage.
3) Stocks included in the F&O list are exempted from price circuit filters and are only circumscribed by the quantity freeze limits in F&O and the index level filters.
About the two companies to be added to F&O
A) Honeywell Automation is into security related automation services catering to the security needs of homes, offices, factories, data centers etc. The stock of Honeywell trades at a price of around Rs.39,496.
The stock has a market cap of Rs.34,921 crore and a free float market cap of Rs.8,730 crore. Honeywell has a face value of Rs.10 per share and quotes at a historical P/E ratio of 80.47X.
B) Aditya Birla Capital is the financial services arm of the Aditya Birla group. It is essentially into financial lending and allied activities. It is also the holding company for the insurance and asset management businesses. The stock of Aditya Birla Capital trades at a price of around Rs.108.55.
The stock has a market cap of Rs.26,228 crore and a free float market cap of Rs.7,606 crore. AB Capital has a face value of Rs.10 per share and quotes at a historical P/E ratio of 264.32X.
The lot sizes will be determined at an approximate lot value of between Rs.7.50 lakhs and Rs.10 lakhs.
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