Tumble in F&O volumes raises questions on where the money might have headed
Mint New Delhi|December 31, 2024
In the past three months, the Nifty 50 has fallen 8.5% while the Nifty Smallcap 250 has dropped just 5%
Dipti Sharma

With trading volumes in F&O (futures and options) shrinking dramatically, a pressing question emerges: Where did these volumes go? Some experts speculate the volumes might have shifted to small-cap stocks in the cash market.

To protect investors and rein in speculative trading, India's markets regulator took decisive measures targeting the derivatives segment (F&O), including reducing weekly option products that dominated trading volumes. This has led to a sharp decline in the total F&O turnover since November.

The ripple effects are visible in the cash market as well. After peaking in July, the daily average turnover has been falling, particularly in large-cap and mid-cap segments.

Adding to this narrative, a YES Securities report dated 17 December highlighted a sharp decline in the five-day average NSE total F&O turnover, from ₹413 trillion in January to ₹186 trillion in December.

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