When analysed for why turnover (total value of all derivative contracts traded during the month) fell below Below ₹200 Lakh Crore in August which is 18-Month Low , below factors emerge :
SEBI’s New Rules :
SEBI introduced higher margin requirements and stricter position limits for retail traders inclusive of weekly index derivatives reduction , fewer expiries, less speculative trading.
Increase in Securities Transaction Tax (STT):
The government raised STT on F&O trading that is from 0.017% to 0.02% on sell side in futures, and higher in options and this increased cost, reduced activities of high-frequency traders and scalpers
Reduced Retail Participation:
Many retail traders have faced losses (SEBI data shows 9 out of 10 lose money in F&O). As a result traders shifted from derivatives to cash equity delivery trading due to lower risk and no margin leverage.
FIIs were net sellers :
Given that August 2026 hit an 18-month low in derivatives turnover, it strongly implies that FIIs were net sellers in the Indian cash market during that period, or at the very least, sitting on the sidelines with reduced activity.
Lower Volatility:
· In August, the market was less volatile compared to previous months.
· Derivative volume is higher when markets swing wildly.
· Low volatility = less trading by speculators.
Author Sa. Venkat Ramanujan is a Certified Environment Social Framework Specialist of Word Bank Group and also Certified Independent Director of IICA, Ministry of Corporate affairs , Govt of India.
He is Member of Institute of Directors & All India Management Academy ( AIMA ),
He is Founder & CEO of Trust Infosys Incorporation – Govt. of India accredited startup venture, A distinction holder in his Post graduate MBA studies and a sustained learner for three decades in the domains of engineering & infrastructure projects , international trade & contracts , data & cloud management , environmental, social & corporate governance.,
Environmentalist, Voracious Reader, Interested in Cats and Dogs, Love Gardening, Reuse & Recycler of Natural Resources,
for more details check in >> venkatramanujam.in
