It is a big development for traders as NSE has put limits on the lot size of index and stocks. The move will restrict the lot size that will be traded on the exchange. The lot size has been frozen for Bank Nifty, Nifty and Nifty Financial Services. What is the order limit and why this decision has been taken? Zee Business’ Varun Dubey has this full report.
The move has been made by the NSE to put a curb on the volatility. The restrictions are not just on indexes like Nifty 50, Bank Nifty, Nifty Financial Services but also on the stocks. The limits have been imposed to reduce the volatility and safeguard investors’ interests, Dubey said.
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In the Nifty Bank, there will not be more than 1200 single orders. The lot size for Nifty as per the current levels is 2800. For Nifty Financial Services the lot size is 2800. This means that the traders will be able to do trades up to the above-mentioned amount in one go. However, the traders can do trade multiple times, he added.
Even on the stocks, NSE has put a lot of criteria. One such criterion is that the market position should be either 1 per cent or the notional value will be up to Rs 2.5 cr.The freeze will be made based on whichever is lower of the two.
The strike price will be considered to arrive at the notional value.
The good thing is that the NSE will be constantly reviewing the lot size and do it month-on-month basis. There will also be an excel sheet that will be uploaded with the stock.
Dubey said that this is a big step undertaken by NSE.
The quantity freeze will also be dependent on corporate action and one must visit the website to know the current lot size at any point in time.
Market Expert Ashu Madan said that the move could be a step to reduce the volatility in the markets. It could also be to limit the impact of algorithms on trade which has only increased.
The discount broking houses, where there is a per-order trade, stand to benefit from the move. This is because the trades will increase for them.
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NSE ने इंडेक्स और शेयरों के लॉट साइज पर अंकुश लगाया...
निफ्टी, बैंक निफ्टी, निफ्टी फाइनेंस के लिए लॉट साइज फ्रीज...
क्या है नई ऑर्डर लिमिट, क्यों लिया गया ये फैसला जानें यहां#NSE #Nifty #StockMarket @AnilSinghvi_ @VarunDubey85 pic.twitter.com/3AyLmHKcqW
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Zee Business Managing Editor Anil Singhvi said that the freak trade practices will stop if the lot sizes are smaller. Also, the discount broking houses may see higher earnings from broking fee. The real impact will only be seen in due course, he further added.
