The average daily trading volume (ADTV) in the equity segment of BSE and NSE combined fell 13% in February — a 15-month low — over the previous month. It has dropped 44% compared to the average turnover in 2024. In derivatives, the turnover in options — the most popular instrument among retail traders — declined 2% from the previous month and was down 48% from 2024’s average volumes. Options turnover in February at Rs 187 lakh crore was at its lowest level in 27 months.
The decline in volumes was also driven by measures introduced by the capital market regulator Sebi in November aimed at curbing excessive speculation in futures and options, and curb growing retail investor participation. Futures turnover on the NSE also fell sharply to Rs 1.61 lakh crore, down 15% from the 2024 average.
The markets are finally correcting, and the broking industry is seeing a massive drop in terms of both the number of traders and volumes, said Nithin Kamath, founder, Zerodha, India’s leading broking firm in a post on X. “Across brokers, there’s a more than 30% drop in activity.
Combined with the true-to-market circular, we are seeing degrowth in the business for the first time since we started 15 years ago,” said Kamath. “By the way, if this continues, the government will not make even Rs 40,000 crore from STT in FY 25-26, at least 50% below the Rs 80,000 crore estimate.”
Over the past four years, until September 2024, equity derivatives — particularly options — saw explosive growth, driven by a bull market and the introduction of weekly contracts. This surge attracted a wave of retail traders hoping for quick gains. However, the rapid rise in speculative activity raised concerns for both the government and SEBI, leading to stricter regulations aimed at bringing more stability to the market.
