Good news for F&O traders!

The popular phrase, ‘Change is the law of nature’ can be applied to markets as well. As we know, from time to time, SEBI revises the lot sizes of derivative contracts. So, this is a quick update, especially for traders, who deal in futures and options (F&O) as we share a list of stocks that have witnessed a revision in their lot size. Meanwhile, the revision will be effective from April 30, 2021 (For May 2021 & late expiries).   

There are about 156 stocks in F&O segment. Out of these, nearly 40 stocks lot size have been trimmed to half and in the case of Bajaj Finserv and Coforge, the market lot size has been revised downwards, but the new lot size is not a multiple of old lot size.   

Adani Enterprises, Adani Ports & SEZ, Ashok Leyland, Bajaj Finance, BHEL, Cipla, Grasim Industries, Hindalco, IDFC First Bank, Jindal Steel & Power, JSW Steel, M&M, MindTree, Info Edge, SBI, Tata Chemicals, Tata Motors, Tata Power, Tech Mahindra, Titan, Vedanta and Wipro are among the 40 stocks that will see a revision in the market lot size, effective from April 30, 2021.  On the other hand, the revised lot size of Bajaj Finserv and Coforge is 75 and 200 shares, respectively.   

Why has this been done?   

Usually, SEBI fixes lot sizes of derivative contracts in such a manner that the total contract value remains within Rs 5 lakh to Rs 10 lakh. However, certain stocks that have seen good appreciation in price in the recent run-up, their total contract value have moved beyond the limit mentioned above. Hence, under the periodical review mechanisms of SEBI, the lot size has been revised so that they fit within the range. For example, the lot size of Adani Enterprises earlier was 2,000 with the last close of around Rs 1,181.55 while the total contract value stood at Rs 23,63,100, but as the lot size has been revised down to 1,000 from April 30, 2021, its total contract value would roughly be around Rs 12 lakh.