Retail investors' inclination towards F&O trading is increasing; Finance Minister, SEBI and experts are worried

In the last few years, the stock market has given very good returns. Due to this, many new and young investors have also been inclined towards the equity market. But, instead of a reliable method like a long-term investment, many retail investors are trying their hand at complex and speculative methods like futures and options (F&O) trading. They are also facing huge losses in this.

Experts say that investors with a speculative nature are getting attracted to futures and options (F&O) trading. The most worrying thing is that they are not aware of this segment, but in the greed to make quick money, they start trading and lose their deposits. Experts advise that retail investors should do F&O trading after having complete information.

Recently, Finance Minister Nirmala Sitharaman and Chief Economic Advisor V Anantha Nageswaran expressed concern over the increasing participation of retail investors in F&O trading. In November last year, SEBI chief Madhabi Puri Buch also warned small investors that they should avoid trading in F&O.

Actually, F&O is a highly complex trending method. The purpose of warning retail investors about this is to keep them away from any form of speculative trading. However, because of the potential for large profits, investors are drawn to it.

The F&O segment's popularity is evidenced by its growing business. The monthly turnover in the F&O segment was Rs 8,740 lakh crore in March 2024, compared to Rs 217 lakh crore in March 2019. At the same time, the average daily turnover in the equity cash segment was Rs 1 lakh crore, while the average daily turnover in the finance and operations segment was around Rs 330 lakh crore.