India’s derivatives market has been drawing attention due to its rapid expansion and heightened risks. However, Nithin Kamath, the founder and CEO of Zerodha, has shed light on a different perspective. Despite the commotion, only a small fraction of investors are actively engaged in futures and options (F&O) trading.
Kamath emphasized that the level of participation in F&O trading is relatively low when compared to the overall investor population. Contrary to common beliefs regarding F&O trading in India, Kamath highlighted that it remains a significantly small market in comparison to other investment avenues.
In March, approximately 30 lakh individuals participated in F&O contracts, a number that drops to about 20 lakh for the entire financial year FY26. Even when combining equity and F&O traders, the total count reaches around 64 lakh, representing a minor portion of India’s expanding investor base.
Despite India having nearly 13 crore unique investors, only about 3.8 crore were actively involved in either cash or derivatives trading segments. This indicates that merely 30% of investors engaged in any form of trading activities, revealing a large proportion of individuals with demat accounts but minimal market participation.
The trading landscape has witnessed a significant concentration of activity among a select group of highly active traders, contributing substantially to broker revenues. This trend underscores the uneven distribution of trading within the market, particularly evident in the derivatives segment.
Kamath pointed out that in F&O turnover, a vast majority of trading volumes, approximately 60–70%, originate from a small subset of investors, comprising only 1–2% of the total. This disparity highlights the dominance of a limited group in trading volumes, leaving a significant portion of investors on the periphery.
These observations by Kamath emphasize the current scenario in India’s stock market, where active participation remains restricted to a small cohort. Moreover, they raise concerns regarding risk exposure, investor knowledge, and the sustainability of a market reliant on a minority for trading activity.
In essence, while the F&O market may appear substantial at first glance, it is, in reality, a specialized domain controlled by a handful of avid traders, prompting reflections on the market’s dynamics and future outlook.