The Hindu Business Line : New F&O scrips hog limelight

Mumbai, Nov. 28 The 15 stocks that would be eligible to trade in the F&O segment from November 30 have been outperforming the market in the mid-cap space on a rising trend of share volumes in the last one week.

KPIT Cummins Infosystem went up by more than 20 per cent on the NSE and 19 per cent on the BSE on Wednesday. Development Credit Bank went up by 19 per cent, Info Edge (I) Ltd by 17 per cent, Great Offshore Ltd by 9 per cent and Ispat Industries was up by 9 per cent on the BSE. In contrast, the midcap index at the BSE rose by a little over two per cent.

Analysts tracking the derivatives market attribute this to investors picking up stake in the cash segment in anticipation of heightened market interest in these scrips once they become eligible for trading in the F&O segment. Such heightened interest happens for a variety of reasons, they say.

“In the cash market, the whole sum has to be paid to buy the stocks, where as in the futures market only part amount needs to be paid, which increases the liquidity level in the stock,” said Mr Sailav Kaji, Head Derivatives & Strategy, PINC Research.

“They are attracting more interest as they see it as an alternative avenue to trading in the cash market,” said Aalap Shah, Derivative analyst, Dolat Capital Markets. Also any additional avenue which an investor gets to invest in a stock induces positive sentiment for those stocks, he added.

A dealer who has observed trading action commented that his experience is that people who wish to hedge their exposure in the cash market can now take positions in the F&O market, which makes the stock that much more attractive as an investment option. According to analysts, the increase in the activity levels of these stocks also helps them turn attractive avenues for institutional investors.