Retail investors should avoid trading in derivatives, says NSE chief Ashish Chauhan

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Also Read: Equity mutual fund inflows surge to ₹19,932 crore in October, SIP contributions at record-high: AMFI data Trading in futures and options (F&O) in India has seen a sharp growth in recent years, especially after the COVID-19 lockdown, with a flock of new digitally savvy traders trying to make quick bucks in the stock market. NSE’s options average daily turnover reached ₹318 trillion in October 2023. Amongst index options, Bank Nifty contracts had the largest share at 40.7% last month.

Nifty index options had the second highest share at 34.3%, while FinNifty's share was 20%. (Exciting news! Mint is now on WhatsApp Channels Subscribe today by clicking the link and stay updated with the latest financial insights! Click here!) Derivatives trading on BSE also gained momentum as the exchange’s options volumes, which were non-existent between January–May 2023, had ADTV of ₹30 trillion during October, as per ICICI Securities. NSE chief’s worries over the risks involved in derivatives hold true if we take a look at a report published by capital market regulator Securities and Exchange Board of India (SEBI) earlier this year.

The regulator’s study report shows 90% of the active traders in the equity F&O segment incurred losses in FY22. Read here: Only 1 out of 10 F&O traders made profit in FY22; average loss stood at ₹1.25 lakh Chauhan’s message came on the occasion of Diwali Muhurat trading, a tradition followed in the Indian stock market for decades. The Sensex rallied 355 points, or 0.55%, while the Nifty 50 jumped 100 points in the one-hour special Muhurat trading conducted on Sunday, November 12, on Diwali 2023.