Polycab India shares fall 6% in two sessions. What’s triggering the selloff?

NSE stopped issuing new futures and options expiry months because Polycab entered an insolvency-related situation. The NCLT admitted an insolvency petition against the company over alleged operational dues of Rs 2.79 crore. Under the framework described in the article, a company admitted to insolvency moves into a restrictive trading category and becomes ineligible for F&O trading.

The exchange is not immediately cancelling every derivative contract. October, November and December contracts will continue trading as usual. NSE will also introduce new strike prices in those existing contract months before discontinuation. However, after the October 2026 contracts expire, no new expiry months will be issued.

The NCLAT later stayed the NCLT order and kept it in abeyance until further orders. Polycab’s appeal is scheduled for October 26, 2026. Even so, the NSE decision remains important for derivatives investors because it limits the stock’s future F&O availability and brings additional margin and surveillance measures.

A futures contract is an agreement to buy or sell an underlying asset at a later date under set terms. An options contract gives the buyer a right, but not an obligation, to buy or sell at a specified price before or on expiry. Futures and options are called derivatives because their value comes from an underlying stock, such as Polycab India.

Availability matters because each expiry month gives investors another timeframe for hedging, speculation or managing positions. Exchanges can also add new option strike prices within existing expiry months. In Polycab’s case, NSE said current October, November and December contracts would continue, and new strikes would be introduced before discontinuation.

After existing contracts expire, NSE will not issue new expiry months. That does not mean every Polycab share automatically disappears from the market. It means the stock’s future derivatives menu becomes unavailable, while the article also identifies restrictive trading and surveillance actions linked to insolvency treatment.

NSE has imposed a 100% margin on all existing Polycab derivative contracts. The requirement applies on a T+2-day basis. It covers open positions held as of October 13 and new positions created from October 14 onward. This is a significant tightening because investors must provide the full applicable margin instead of relying on a lower requirement.

In practical terms, a 100% margin means the required collateral equals the entire prescribed contract exposure for the position. For example, if an exchange calculates a position’s required margin as Rs 1 lakh, the investor must provide Rs 1 lakh under the new rule. The exact rupee amount depends on the position and exchange calculation.

The measure increases the money investors must keep available and can make holding or creating positions more difficult. It applies while existing contracts remain open. Once those contracts expire, NSE will not issue new expiry months, and further surveillance actions will apply from January 1, 2027.

When the existing Polycab F&O contracts expire, NSE will stop creating new expiry months. Investors can trade the stated October, November and December contracts while they remain available, and NSE will introduce new strikes in those contract months before discontinuation. Once a contract expires, however, it cannot be replaced by a newly issued month under this decision.

This affects derivative positions directly. Investors must manage, close or allow existing positions to expire within the available contract schedule. The article also says a stock admitted to the insolvency and bankruptcy framework moves to a restrictive trading category and becomes ineligible for F&O trading. That explains why future derivatives access is being withdrawn.

The article does not say that all Polycab shares will stop trading. It says further surveillance actions, including price band and gross settlement measures, will apply from January 1, 2027, after existing contracts expire. The NCLAT stay and scheduled appeal may shape the later position.

The sequence began with Asier Metals Private Ltd filing a Section 9 petition under the Insolvency and Bankruptcy Code, 2016. It alleged operational dues of Rs 2.79 crore from Polycab. The NCLT’s Ahmedabad Bench admitted the petition on October 7, starting the insolvency-related development described in the article.

The article explains the mechanism behind NSE’s response. Stocks can be excluded from F&O when they fail criteria covering liquidity, market-wide position limits and corporate restructuring. It further states that when a company is admitted to the insolvency framework, its stock moves to a restrictive trading category and becomes ineligible for F&O. NSE therefore stopped issuing new expiry months, kept current contracts temporarily, and imposed 100% margin.

The NCLAT stayed the NCLT order on October 9 and kept it in abeyance until further orders. Polycab’s appeal is scheduled for October 26, 2026. Despite that stay, NSE’s circular provides for contract discontinuation and later surveillance actions.

The NCLT is the tribunal that passed the initial order admitting Asier Metals’ insolvency petition against Polycab. Admission means the petition was accepted under the insolvency process described in the article, based on alleged operational dues of Rs 2.79 crore. The order was passed by the NCLT’s Ahmedabad Bench on October 7.

The NCLAT acts as the appellate tribunal in this dispute. On October 9, it stayed the NCLT’s order and directed that the order be kept in abeyance until further orders. In everyday terms, the NCLAT temporarily paused the effect of the NCLT decision while considering Polycab’s appeal. It did not represent a final ruling that the petition was rejected.

Polycab’s appeal is scheduled to be heard on October 26, 2026. The distinction matters because the NCLT admission triggered the insolvency-related trading consequences described by NSE, while the NCLAT stay creates uncertainty about how the matter will ultimately proceed.

A legal stay does not instantly restore every market facility. NSE has already announced that no new Polycab expiry months will be issued after existing contracts expire, while current contracts remain subject to a 100% margin. Investors may therefore focus on the exchange’s operational rules as well as the court process.

Removing derivatives access can limit the ways investors trade or manage exposure to a stock. A 100% margin also ties up more money in open positions. The article further refers to restrictive trading, price bands and gross settlement under the insolvency framework. These measures can make trading less flexible and may affect how market participants value the stock.

The NCLAT stay is important because it keeps the NCLT order in abeyance until further orders. However, Polycab’s appeal is still scheduled for October 26, 2026, and the article does not state the final outcome. Therefore, the stock can face market pressure while the legal and exchange-related consequences remain unresolved.