Institutions lap up F&O entrants

It has been a dream run for all the 14 stocks included in the futures & options (F&O) for the last five trading sessions "" after the announcement of their names in the derivatives segment post-trading on August 30 "" as speculators and investors bought into these new stocks anticipating "liquidity premium" associated with such stocks.

All the new entrants also saw rapid increase in volumes in the cash segment during that five sessions. Bhushan Steel, NIIT Technologies, Tulip IT Services, Sasken Comm Technologies, CMC Ltd, Havell's India, Aptech, Nucleus Software, Welspun Gujarat, Yes Bank, LMW, Tech Mahindra, 3i Infotech and Biocon entered the F&O segment from on Thursday.

"There is liquidity premium associated with stocks that are in the F&O segment. A lot of investors and speculators buy into these stocks anticipating a premium associated with these stocks due to the increased liquidity provided by the F&O segment," said Sunil Jain, a derivative analyst with Edelweiss Securities. "The volumes in the cash segment in these counters have also gone up manifold." 

MORE OPTIONS FOR FUTURE 14 stocks included in F&O                                             (Price in Rs)
Name	Group	30/08/07	05/09/07	%chg
Bhushan Steel	B1	659.90	936.95	41.98
NIIT Technologies	B1	281.45	342.65	21.74
Tulip IT Services	B1	782.80	925.45	18.22
Sasken Comm Techno	B1	319.80	377.00	17.89
CMC	A	982.70	1119.70	13.94
Havell's India	B1	460.90	521.60	13.17
Aptech	B1	286.64	318.95	11.27
Nucleus Software	B1	335.65	370.40	10.35
Welspsun Gujarat Stahl	A	233.00	255.65	9.72
Yes Bank	B1	168.00	183.55	9.26
LMW	B1	2756.45	2972.65	7.84
Tech Mahindra	B1	1196.05	1289.65	7.83
3I Infotech	B1	137.60	148.25	7.74
Biocon	B1	433.95	466.75	7.56

Stocks in F&O segment attract buying interest from institutional investors, which is expected to prop up their share prices.

"Institutional buyers stay away from illiquid counters as they would not be in a position to get in and get out from these stocks without impacting the share prices. Once a stocks gets into F&O category, the counter comes into the investment radar of domestic and foreign institutional investors," explained another analyst with a local brokerage.

Share prices of these stocks have run up between 10 and 44 percent in five sessions. Among the new entrants, the biggest gainer was Bhushan Steel, which went up from Rs 659.90 to Rs 947.55, a rise of 43.59 percent.

The other major risers were NIIT Technologies (up 28.95 percent to Rs 362.95), CMC Ltd (18 percent to Rs 1,159.10) Tulip IT Services (17.52 percent to Rs 920), Sasken Comm Technologies (17.52 percent to Rs 379.40), Havell's India (11 percent to Rs 511), Aptech (18 percent to Rs 337.95), Nucleus Software ( 11.41 percent to Rs 373.95), Welspun Gujarat (near 4 percent to Rs 241.44), YES Bank (13 percent to Rs 183.55), LMW (16 per cent to Rs 3,199.55), Tech Mahindra (10.85 percent to Rs 1,325.85), 3i Infotech (8.1 percent to Rs 148.85) and Biocon (8.61 per cent to Rs 471.35).

Interestingly, on the first day in F&O segment on Thursday, shares of Welspun Gujarat slipped by 5.55 percent, after the counter saw unwinding of position by speculators.

Among the new entrants, the biggest riser on Thursday was LMW, which hit the 10 per cent upper circuit limit.