Despite India's derivatives market being widely perceived as booming, Nithin Kamath, founder and CEO of Zerodha, revealed that participation remains surprisingly limited. According to his recent social media post on X, only about 30 lakh people traded F&O contracts in March 2026, with the full FY26 figure reaching approximately 20 lakh people. When combined with equity traders, the total active investor base across both segments reaches roughly 64 lakh people. As per NSE's April Market Pulse report, out of 12.91 crore registered investors as of March 31, 2026, only 3.79 crore, or 29.4%, traded in cash or derivatives markets at least once during the financial year. Kamath emphasized that this remains a very small market compared to other financial instruments, despite widespread concerns about speculative activity in futures and options trading.
The data highlights a stark gap between perception and reality in India's investment landscape. Out of nearly 13 crore unique investors, only around 3.8 crore were active across cash and F&O segments, representing approximately 30% of the total investor base. As reported by NSE, the number of investors participating in the cash market segment declined to 3.58 crore in FY26 from 3.77 crore in FY25, while equity derivatives participation fell to 85 lakh from 1.06 crore in the previous year. Among the 85 lakh F&O participants, 21 lakh traded solely in F&O without investing in the cash market, accounting for just 1.6% of the total investor base. Kamath emphasized that this remains a very small market compared to almost anything else, despite the latest increase in securities transaction tax (STT) by the government on equity derivatives, which he believes will unlikely curb speculation and could instead deepen structural problems in the market.
The most concerning revelation is the extreme concentration of trading volumes among a small segment. According to Kamath's analysis, nearly 60-70% of F&O turnover is generated by just 1-2% of traders, indicating that while millions may have entered the markets, the intensity of trading is driven by a very narrow group. This concentration explains why brokerage revenues remain strong despite relatively low overall participation, as a small set of highly active traders continues to account for a disproportionate share of transactions. Notably, 76% of equity derivatives participants also engage in the cash market segment, indicating considerable overlap between the two trading segments. The highly skewed structure of the Indian markets means that the entire revenue pool of the broking industry comes from this relatively small pool of traders.
Despite the limited F&O participation, the overall market has shown significant expansion in other segments. NSE data showed the base of active individual investors who traded at least once during the year expanded significantly from 46 lakh to over 3 crore, with growth especially pronounced in the cash market segment. This expansion reflects the broader financialisation of household savings, improved digital access to trading platforms, and growing investor comfort with exchange-traded instruments. The growth in cash market participation suggests that while derivatives remain concentrated, the broader financial participation is expanding, though the derivatives segment continues to show moderation in participation numbers.
