Avoid pitfalls of risky derivatives or frequent trading in markets in 2024: NSE's Ashish Chauhan

Ashishkumar Chauhan, MD and CEO, NSE

Ushering in the new year, Ashishkumar Chauhan, Managing Director and Chief Executive Officer of the NSE, said the stock market is meant for long-term wealth creation and risky trades should be avoided.

"NSE encourages you to embark on a journey of financial growth with prudence and diligence. Deal only with registered intermediaries and never invest in unregulated products" he said.

"Investment through stock market is meant for long-term wealth creation. An unpleasant experience can dishearten even the most resilient investors, making it crucial to tread with caution if you are new to the stock market or not an expert. Avoid the pitfalls of high-risk derivatives or frequent trading in the stock market" he added.

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Long-term investments usually yield better results based on past experiences, Chauhan said, encouraging investors to become committed participants in India's growth story and pave the way for a brighter future.

NSE in CY23

Chauhan's message comes at a time when F&O trading has grown multifold in India. NSE alone boasts a 73.7 percent global share in the number of contracts traded in equity derivatives in CY23 as of November-end. It had a 60.5 percent global share in the number of contracts traded in derivatives across all asset classes as of November-end.

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Individual investors who have traded at least once in equity derivatives this calendar year stood at 83.6 lakh, up 31 percent year-on-year (YoY), while for the cash segment, the number declined 0.4 percent YoY to 2.67 crore. This only shows that speculators are steadily rising in Indian markets.

According to an Axis Mutual Fund report, derivatives volumes account for 5-15x cash market volumes in most markets, while in India today, it is more than 400x. As per a SEBI study, 9 out of 10 F&O traders lose money, 84 percent of them are men, and 75 percent are under 40.