Stock Broking co stocks good to accumulateSince SEBI has now requested to revise the lot size for F&O from end-Nov'24. Many mid-sized traders will lose the opportunity of trading on F&O. This may result in physical stock based purchase and sales increase for these mid-size people. Hence demat delivery charges revenue expected to increase for these stock broking cos. Its best to accumulate these stocks for gains.
Trading in F&O, especially for stock f&o will be extremely risky, as there will be less liquidity. For example, even a trader having capacity to buy 20 lots now, will be limited to 8 lots after implementation. This will result in riskier biz even for big size traders. It will be limited to institutions now. Good move by govt. This will encourage max physical delivery based trading.
Immediate effect, indices expect to move up as there will not be multiple transactions on physical trading, due to brokerage and taxes. So people will buy and hold and expected to plan for long term instead of short term. If the super trend gradually reverses , they may offload and enter if trend continues. Short selling without physical stock will be limited.
Once implemented, shorts sellers (F&O) will be caught (one knows only the selling price), unless base trend is on reversal or downward. Opposite in downward trend, short buyers will be caught (one knows only the buying price). Its always better to have physical stock for selling F&O and Cash for F&O buying, just in case either of the thing happens. IMHO, its the only safe way to do F&O.
Physical stock holders will be caught when market down (as the big sellers also will sell and by forming lower circuit with no liquidity in downtrend). Small-medium size investors cannot hedge their physical stocks. Hedging can be possible, only if one have their portfolio size of min 20lakhs. Only super rich can hedge :-). The entire stock market may be very riskier for trade, especially for mid-size traders. Cautious approach is required. Its always better to trade with just 40% max of one's capital, even for physical stock trading. This will protect during bad news time, where index itself hitting lower circuits (like during corona).
Above just for educational purpose.
