There are 4000+ companies1 that are traded in NSE/BSE. Of these, 198 stocks are included in FNO segement2. For these stocks, Futures & Options(FNO) contracts will be available and these stocks won't have any fixed ciruit limits.
On 11th April 2018, SEBI released a circular(SEBI/HO/MRD/DP/CIR/P/2018/67) on a framework3 for reviewing stocks in derivatives segement. Based on this framework, a stock has to meet the below criteria be added in FNO segement.
The stock shall be chosen from amongst the top 500 stocks in terms of average daily market capitalization and average daily traded value in the previous six months on a rolling basis.
The stock’s median quarter-sigma order size over the last six months, on a rolling basis, shall not be less than ₹25 Lakh.
The market wide position limit(MWPL) in the stock shall not be less than ₹500 crore on a rolling basis.
Average daily delivery value in the cash market shallnot be less than ₹10 crore in the previous six months on a rolling basis.
If a stock is in FNO category and fails to meet this criteria, it will be removed from FNO segment.
In 2021 alone, SEBI released 6 circulars thrugh which 32 new stocks are added in the FNO segment.
There is a long discussion on Zerodha TradingQ&A forum7 on why DMART was not added to FNO category but no one could give any explaination.
After that, I have sent an email to SEBI & NSE seeking clarification for the same. It has been more than 6 months and they haven't responded yet. I have reached out to few people in the trading community privately to get clarification on the same. But nobody I know has any clue on this.
I am still looking for an answer. If you can shed some light, please send out a message to me. I would like to have a quick chat with you regarding the same.
Hoping to solve the mystery soon.