Does addition of fundamentally sound stock affects in price in short/ mid term.
No definite answer for this, there is no change in fundamentals of stock even if it is added to fno but getting added to fno will give more exposure to the stock, it emphasizes stock has passed few rules to get added to fno which itself can be positive on stock in immediate short term but that necessarily doesn’t mean stock has to go up/down. If a stock is added to any index where ETF/index funds follow it then there is a chance for it to go up in immediate short term as those funds have to buy it to balance the new additions.
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appreciate your reply and thanks for “stock is added to any index” point. Cant agree more.
It has been my understanding of recent historical data that even if fundamentals remain same, stock mostly goes up (at-least for short term) after addition to FNO. So assuming if the stock is fundamentally strong can we safely say that mostly it goes up ?
You might see stock will be less volatile after added to F&O. I mean you won’t see circuit coming in the stocks very frequently.
Also it opens the gate for the big money (dii/foi/mf). Because institution don’t prefer to invest without hedge. F&O gives hedge.