Zomato In, Gujarat Gas Out — Tighter SEBI Norms On F&O Liquidity To Cut Out 18 Stocks

Market regulator's move to curb liquidity and price manipulation in the derivate segment might lead to an exclusion of 18 stocks, including Gujarat Gas Ltd., United Breweries Ltd. and Dr Lal PathLabs Ltd., according to Nuvama Research.

Meanwhile, about 80 companies—including "strong contenders" such as Zomato Ltd., and Jio Financial Services Ltd.—could be included as per the latest revisions by the Securities and Exchange Board of India. The new rules could also propel two names into the Nifty 50 in the 2025 rejig, the brokerage said in a note dated Aug. 30.

The real excitement kicks in if F&O inclusion for both these names happens within the next few months, it said. "According to Nuvama Alternative’s calculations, this could pave the way for Zomato and Jio to enter the Nifty 50 in the March 2025 review."

Under the revised rules, the median quarter sigma order size for stocks—stock liquidity—has been increased from Rs 25 lakh to Rs 75 lakh, making it more difficult for stocks to be manipulated.

The minimum market-wide position limit, or MWPL, has been tripled from Rs 500 crore to Rs 1,500 crore, and the minimum average daily delivery value has been raised 3.5 times, from Rs 10 crore to Rs 35 crore. Once a stock is removed from the derivatives segment, it cannot be reintroduced for a year from the date it was last traded in this segment.

The markets regulator is implementing a new 'Product Success Framework' for stock derivatives, similar to the one used for index derivatives.

Indian Railway Finance Corp., Rail Vikas Nigam Ltd., NHPC Ltd., Mazagon Dock Ltd., Adani Total Gas Ltd. and JSW Infrastructure Ltd., are among the 80 stocks that will be included. "Given that it has been years since fresh inclusions were made, it seems clear that SEBI intends to include new stocks in derivatives."

The earliest exclusion review could occur in December 2024, with any exclusions from the derivatives segment taking effect in February 2025 or later.

The brokerage has not yet factored in the PSB exclusion criteria, as its exit review is scheduled for March 2025. "Any subsequent exclusions would likely occur at least 8 to 9 months from now."

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