Retail trading boom doubles turnover of futures and options at NSE

By Ashutosh Joshi and Chiranjivi Chakraborty

A growing number of Indian investors are plunging into riskier bets, dabbling in stocks with the hope of making quick profits.
 

The notional turnover of futures and options on the National Stock Exchange of India Ltd. — the world’s largest derivatives bourse by the number of contracts traded — has more than doubled in the last one year. 

Based on the 10-day moving average, it stood at $5.04 trillion on Tuesday, up from $2.5 trillion at the end of 2022, according to data compiled by Bloomberg. 

A retail trading boom has propelled India’s stock markets to multiple highs this year. The frenzy is visible in different corners of the world’s fifth-biggest market — from the gush of flows into equity mutual funds to massive oversubcriptions for initial public offerings.

Retail investors currently make up for more than 25% of the average daily turnover in derivatives. More than 8 million individual investors traded in this segment in 2023, an increase of about 30% from 2022, according to NSE data.

While the NSE enjoys a near monopoly in derivative trading in India, its smaller rival BSE Ltd. is also ramping up efforts to get a bigger pie of the fast-growing market.