How does getting listed in F&O enables better price discovery?

In fundamentally strong companies there is usually price action post announcement of Inclusion in f&o.

What are the possible high impact levers for that to happen?


Some fund houses and insurance companies (which will have certain entry criteria such as market cap, f&o stocks etc.) will start buying those newly promoted stocks as well as reduce positions in stocks that are kicked out, as part of their rebalancing. So when the fund houses start buying you can see increased volumes as well as the price for some period.