Does stock price fall after stock enter into f&o ban?
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my observation … stock price will fire up usually after the stock comes out of the ban
when some events happen related to the stock which is in ban currently , price reaction will be very violent
Ban brings in high volatility - both when the security is put under ban (or about to be put under ban) and also when it comes out of the ban period.
There is no guarantee that price for sure will rise or fall before, during, or after the ban.
Instead, you are taking a big risk in terms of ILLIQUIDITY. Remember that ban means no new F&O positions are allowed - Only existing ones are allowed to be squared-off. That means lower number of market participants, much reduced market activity, no fair price discovery, and hence wide swings in prices (in either direction) for F&O contracts.
In case of F&O shorts, your margin money is stuck - either you may be forced to close your position at a loss, or keep adding more money to maintain the position.
So my two cents - avoid such securities which are repeatedly hitting the ban. For instance - INDIACEM, JISLJALEQS, IBREALEST, etc. are a few stocks that I repeatedly see in ban period every now and then.