Smaller servings, smaller risks: The Street's trading volume crash diet

A market bloated on F&O speculation has slimmed under Sebi watch - 20% leaner

Equity market activity slowed sharply in the first half (H1) of 2025–26 (FY26), with average daily trading volume (ADTV) in both cash and derivatives segments down about 20 per cent from a year earlier. Stricter rules for derivatives trading and weak market sentiment kept investors on the sidelines.

 

The cash segment’s ADTV slipped 19 per cent to ₹1.1 trillion from ₹1.4 trillion a year ago, while futures and options (F&O) turnover fell 21 per cent to ₹382.3 trillion from ₹485 trillion.

 

The benchmark Nifty ended H1FY26 with modest gains, weighed down by persistent foreign investor outflows that also dragged the rupee lower. The index rose just 3.7 per cent — its weakest first-half performance since H1 of 2022-23. 

The drop in trading volumes follows the Securities and Exchange Board of India’s (Sebi’s) overhaul of the F&O framework last year, which introduced several curbs to rein in speculation. Among these, the one-exchange-one-weekly-expiry rule hit volumes the hardest.

 

Brokerages are likely to report another weak quarter after a steep fall in profits in the June period. Valuations of listed players have already corrected; for instance, Angel One’s one-year forward price-to-earnings multiple has fallen from over 30x a year ago to below 20x.

 

While trading volumes could rebound in the second half of the year, ongoing regulatory uncertainty — including talk of shifting from weekly to monthly expiries — may keep capital market stocks under pressure.