IRFC, IREDA, SJVN among 19 PSU stocks that qualify for F&O entry post Sebi rule revision

As the revised norms for stocks’ entry and exit in the futures & options (F&O) segment comes into force, there are 19 PSU counters which are eligible for inclusion according to estimates by Nuvama Institutional Equities.

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These stocks include Indian Railway Finance Corporation (IRFC), Rail Vikas Nigam Limited (RVNL), NHPC, Indian Renewable Energy Development Agency (IREDA) and Mazagon Dock Shipbuilders, a Nuvama note said.

The others are Cochin Shipyard, Housing & Urban Development Corporation (HUDCO), Life Insurance Corporation of India (LIC), Union Bank of India, Oil India, Ircon International, Bharat Dynamics, NBCC, SJVN, Bank of India, BEML, PNB Housing, NLC India and Indian Bank.

This is a probable list of stocks that could enter the F&O segment as per the new methodology, Nuvama said, adding that the final decision lies with Sebi.

Market regulator Securities and Exchange Board of India (Sebi) has changed the criteria for entry and exit of stocks in the derivatives segment. Under the new rules, the regulator has raised the median quarter sigma order size (MQSOS) over the previous six months on a rolling basis by three times to Rs 75 lakh from the existing Rs 25 lakh, citing that the average market turnover is now over 3.5 times the figure during the last review.

In a circular released on Friday, the regulator gave its rationale behind the decision, saying that the “MQSOS criteria would need to increase between 3-4 times”.

The regulator also revised a stock’s market wide position limit (MWPL) over the previous six months to Rs 1,500 crore from the existing limit of Rs 500 crore. The change comes in the wake of market capitalization now standing at 2.8 times since the last review.

Sebi has also mandated that a stock’s average daily delivery value (ADDV) in the cash market over the previous six months on a rolling basis should not be less than Rs 35 crore. The existing limit is Rs 10 crore. The ADDV has increased by over 3 times since the last review.

Moreover, upon the expiry, unlike index derivatives that are cash settled, single stock derivatives are physically settled.

Sebi has made no changes in the criteria related to the Average Daily Market Capitalization and Average Daily Traded Value (ADTV) for the top 500 stocks.