F&O Ban NMDC

[pradosha]

NMDC was under F&O ban today which does not allow fresh positions for any of the futures and option contracts in that stock. However in todays trading, it is seen that 3077 September Future Contracts are traded ADDING open interest of 1,17,65,200. Further in respect of August Futures that expired today(26-08-2021) 8048 contracts were traded which amount to 5,39,21,600 shares (8048X6700), the REDUCTION in open interest being 2,77,58,100 Shares. In a ban situation every trade should result in SQUARE OFF of a position to avoid creation of a fresh position meaning there should be reduction in open interest to the extent of contracts traded, which is not the case here. I request clarification in this regard from those knowledgeable in F&O. Kindly excuse me if there is any conceptual misunderstanding on my part in posing this query. I have attached: 1. The combined OI statement in excel downloaded from NSE showing no fresh positions for NMDC on 26-08-2021. 2)Screen shot of NSE showing trading figures for August and September Futures.

 

[pradosha]

NMDC price has been battered severely after an Offer for Sale(OFS) of 21,96,50,320 by GOI @Rs.165 per Share in July 2021 which was oversubscribed. The stock has been shorted earlier to announcement of OFS hugely by vested interests who MAY have had prior information of the OFS and there has been a heavy build-up of OI since then resulting in F&O ban for the second time in short period. The Company has reported bumper profits in the last three successive quarters and is in the process of implementing a De-merger proposal of a green field steel plant almost under completion. The Demerger will unlock value with allotment of 1 Equity Share of the De-merged Company to existing share holders. Despite these positive developments , the stock price has fallen from a 52 week High of 213 on 12-05-2021 to Rs.148 today. Retail investors have been affected badly.

It appears that if trades can be executed without liquidation of positions then the very purpose of the ban would be defeated. If there is a huge trading volume in a ban period without commensurate reduction in OI, it leads to suspicion that operators were trading among themselves to push the futures price down and consequently the stock price also down(where they must have taken delivery) which would amount to FAKE trades. My query above has this CONTEXT and I once again seek to be EXCUSED if there is any misunderstanding on my part in making such a drastic observation.