Categorization of F&O Stocks Into Sectors As Per GICS4 min read
Did you know how many F&O stocks are on NSE? 156* to be exact.
But how are they categorized? Let’s find out.
GICS or Global Industry Classification Standard is a system for categorization of stocks into particular sectors. In 1999, MSCI and S&P Dow Jones Indices developed the Global Industry Classification Standard (GICS), seeking to offer an efficient investment tool to capture the breadth, depth and evolution of industry sectors. It is a common global classification standard used by thousands of market participants across all major groups involved in the investment process: asset managers, brokers (institutional and retail), custodians, consultants, research teams and stock exchanges
What Are The Sectors Across The Stock Market As Per GICS?
A stock market sector is a group of stocks that have a lot in common with each other, usually because they are in similar industries. There are 11 different stock market sectors, according to GICS.
They are as follows:
Energy
Companies that do business in the oil and natural gas industry.
Materials
Companies that provide various goods for use in manufacturing and other applications.
Industries
Encompasses a wide range of different businesses that generally involve the use of heavy equipment. Transportation stocks such as airlines, railroads, and logistics companies are found within the industrials sector.
Utilities
Companies dealing with all utilities for commercial and residential customers.
Healthcare
Companies that develop pharmaceuticals and treatments, healthcare equipment and services.
Financials
Banks, insurance companies, brokerage houses, etc
Consumer Discretionary
Companies that sell higher-priced products such as automobiles, luxury goods, as well as leisure products. Both brick-and-mortar and e-commerce-based retail companies form part of this category, along with hotel and restaurant stocks.
Consumer Staples
Companies in the food, beverage, and tobacco industries along with household and personal care products. Retail companies that specialize in selling staples, such as supermarkets are also part of this group.
Information Technology
Companies dealing with software and hardware related to IT.
Communication Services
Telecommunication service providers, media and entertainment companies are part of this list.
Real Estate
Stocks in the sector are responsible for developing new real estate projects and then managing them by obtaining tenants for various spaces within the project property.
Why Is Categorization Important?
Stocks are categorised into sectors to make it easy to compare companies that have similar business models. When investing, one can choose from stocks within the sectors that interest them. Sectors also make it easier to compare which stocks are making the most money. This helps investors make decisions about what their next investments will be.
Now, not all stocks which are part of the cash equity market can be part of F&O club too. There are certain conditions related to stock performance that are important in the inclusion and exclusion into F&O segment.
How Are Stocks Included in the F&O Club?
Here are the criteria for this:
- The stock is chosen from top 500 in terms of average daily market capitalisation and average daily traded value in the previous six months on a rolling basis.
- The stock’s median quarter sigma order size (the order size, in value terms, required to cause a change in the stock price equal to one-quarter of a standard deviation) over last six months should not be less than Rs. 5 lakhs.
- Market wide open position limit (MWPL) in the stock should not be less than Rs. 100 Cr
Continuation criteria for an existing F&O stock:
- Market wide position limit should not be less than Rs. 60 Cr.
- Median quarter sigma order size over last six months should not be less than Rs. 2 lakhs.
- Stock is excluded if the above criteria are not fulfilled for consecutive three months.
Once excluded, a stock is not considered for re – inclusion for a period of 1 year.
Here’s A Complete List of F&O stocks & Their Sectors As Per GICS
*NSE’s list of F&O stocks were last updated on February 25,2021.
Disclaimer – This content is purely for informational purpose and in no way advice or a recommendation. Investment in securities market are subject to market risks, read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory.
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