Trading frenzy and recent tweaks in rules has fuelled the highest daily turnover in the futures and option (F&O) segment. On the expiry day of January series, turnover crossed ₹200 lakh crore on the National Stock Exchange (NSE). Earlier the highest F&O turnover of ₹151 lakh crore was recorded on December 9.

A massive bull run in the last 18 months has made equity trading one of the favourite full-time occupations among the youth and a new crop of future and option (F&O) traders are redefining the Indian share market.

This F&O frenzy can be spotted in numbers too. Sample this:

On January 27, the combined market cap of all listed companies in India stood at ₹260 lakh crore, as per BSE website. On the same day, the trading volume in the futures and options segment crossed ₹200 lakh crore. That means, in a single day, around 80% of the total market capitalisation of Indian stocks are getting traded in the futures and options segment alone.

Recently, SEBI tweaked the options rules and removed the 'Do Not Exercise' (DNE) facility. The classical definition of an 'option' in the share market implies that the option trader has an ‘option’, that is, the trader has the right, but not the obligation, to buy or sell a share at a specific price on or before a certain date. After removing DNE, now it is obligatory for In The Money (ITM) option buyer to either square off his positions before expiry, or buy shares from the auction market and deliver the shares to the counter-party. Thus, one wonders the sanctity of the concept of option in the Indian stock market after SEBI introduced its new rules, abolishing DNE, on October 16, 2021. Around 29 lakh stock option contracts were traded on January 27.

To be sure, exchanges earn money on turnover. Thus, by removing DNE facility, SEBI has ensured that NSE makes a handsome return on rising turnover that also makes its prospect better for planned IPO in later part of this year.

The previous highest turnover was ₹151 lakh crore and within a month the turnover has zoomed by 33% crossing ₹200 lakh crore, indicating the big role played by removal of DNE facility.

Last year, F&O volume crossed ₹100 lakh crore on 22 trading days. F&O turnover crossed ₹100 lakh crore in five trading sessions in December, four each in September, October and November, two days in July and three days in August. This is both an unprecedented and a recent phenomenon.

India is in the grip of a trading frenzy and retail investors are driving this trading mania. Every month over a million new retail investors are knocking the door of the Indian stock markets.

India is witnessing 'a silent revolution' as earlier what used to happen in a year, is now happening every month as 10 lakh new investors are entering into the Indian equity market each month. Over a million demat account openings every month is a phenomenon in India since mid 2020 when work from home culture became prevalent due to the Covid-19 pandemic.

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