Derivatives inclusion puts Hindustan Zinc, PNB Housing, Inox Wind in focus

Hindustan Zinc, PNB Housing Finance, and Inox Wind are expected to draw attention ahead of their inclusion in the derivatives segment on March 28.

 

Already, Hindustan Zinc and Inox Wind have rallied over 10 per cent each since March 6, when NSE issued a notification pertaining to their futures and options (F&O) inclusion, while PNB Housing has gained roughly 3 per cent.

 

Market players said investors should not rule out further gains in the run-up to their inclusion, given the positive turn in market sentiment.

 

Their addition will increase the total number of companies with F&O contracts to 219. On February 28, Amara Raja Energy & Mobility, IIFL Finance, Patanjali Foods, and Titagarh Rail Systems were added to the F&O segment.

 

The inclusion of Hindustan Zinc, PNB Housing, and Inox Wind in the F&O segment follows sharp gains over the past year.

 

Hindustan Zinc shares have surged over 50 per cent in the past year to Rs 457, driven by robust earnings, higher zinc production, and attractive dividends. Brokerages Ventura and Yes Research have set target prices of Rs 585 and Rs 565, respectively. Similarly, PNB Housing Finance has risen 35 per cent to Rs 825, with IIFL and Investec projecting targets of Rs 1,300 and Rs 1,025. After gaining over 50 per cent, Inox Wind currently trades at Rs 171. JM Financial has a target price of Rs 212.

 

Since the Securities and Exchange Board of India (Sebi) introduced new F&O eligibility criteria in June last year, over three dozen stocks have joined the segment. Notably, no new companies were added to the derivatives market between January 2022 and November 2024.

 

Inclusion in the F&O segment enhances liquidity, attracts a broader investor base, and improves price discovery. Fund managers favour these stocks for their hedging potential, which helps minimise portfolio churn. Higher trading volumes also lower impact costs and reduce liquidity risks. For example, Castrol India, NBCC (India), Solar Industries India, and Torrent Power experienced significant increases in cash market volumes after joining the F&O segment in January.

 

F&O inclusion often paves the way for stocks to enter premier indices like the Nifty 50 and Sensex. Recently, Asia Index, the index arm of BSE, added Zomato and Jio Financial Services to its indices following their F&O inclusion. Among the latest entrants, Hindustan Zinc stands out as a candidate for index inclusion, ranking among India’s 50 most valuable companies with a market capitalisation of Rs 1.93 trillion. However, index providers prioritise free-float market cap for such decisions.