During the COVID-19 pandemic, lockdowns and stay-at-home measures led many individuals to explore new sources of income. As a result, the stock market became a popular option for retail traders. This article explores the shift in trading patterns during and after the pandemic, focusing on the surge and subsequent cooling off in Futures & Options (F&O) turnover.
In March 2020, the stock market hit a significant low, but it soon rebounded with an extraordinary bull run that lasted for nearly a year and a half. This rally attracted a growing number of retail investors, drawn by the potential for substantial returns. The enthusiasm for quick profits led to a surge in participation in the F&O market, often driven more by speculation than hedging.
However, recent data indicates a noticeable cooling off in F&O activity. The table below outlines the turnover in F&O segments from February 2024 to March 2024:
| Turnover Rs in Cr | |||
| Description | Feb-24 | Mar-24 | % MoM |
| Index Futures | 8,39,361 | 7,25,717 | -14% |
| Options on Index | |||
| Put | 40,48,86,651 | 34,42,99,300 | -15% |
| Call | 44,03,24,702 | 36,54,94,236 | -17% |
| Stock Futures | 29,69,909 | 26,45,364 | -11% |
| Stock Options | |||
| Put | 31,19,210 | 27,53,107 | -12% |
| Call | 73,15,542 | 59,19,347 | -19% |
| Total | 85,94,55,375 | 72,18,37,071 | -16% |
The data shows a significant decrease in turnover across all F&O segments. Index futures dropped by 14% month-on-month (MoM), while index options (Call and Put) fell by 17% and 15%, respectively. Stock futures also saw a reduction of 11%, with stock options experiencing a 12% drop in Puts and a 19% drop in Calls. The total turnover across all F&O segments decreased by 16% from February to March 2024.
The cooling-off trend wasn’t isolated to March 2024. A similar pattern emerged from January 2024 to February 2024, as outlined below:
| Turnover Rs in Cr | |||
| Description | Jan-24 | Feb-24 | % MoM |
| Index Futures | 8,48,629 | 8,39,361 | -1% |
| Options on Index | |||
| Put | 42,41,87,133 | 40,48,86,651 | -5% |
| Call | 44,77,72,439 | 44,03,24,702 | -2% |
| Stock Futures | 29,41,231 | 29,69,909 | 1% |
| Options on Stock | |||
| Put | 30,88,393 | 31,19,210 | 1% |
| Call | 71,29,809 | 73,15,542 | 3% |
| Total | 88,59,67,633 | 85,94,55,375 | -3% |
In this period, the total turnover dropped by 3% MoM, with Index options experiencing declines of 5% (Put) and 2% (Call). Stock options showed a slight increase of 1% in both Put and Call categories, while Stock futures saw a modest increase of 1%.
Overall, the tables demonstrate a clear cooling-off trend in F&O turnover, indicating that the speculative activity that surged during the pandemic’s bull run has decreased. This shift could reflect a more cautious approach by retail traders or broader market dynamics influencing trading activity.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
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