Derivatives should be avoided by retail investors, be a long-term player: NSE's Ashish Chauhan on Muhurat trading

Stock market is meant for long-term wealth creation. An unpleasant experience disheartens the affected investors to enter the stock market ever again, said NSE's Ashishkumar Chauhan

The stock market is meant for long-term wealth creation and trade in derivatives by retail investors should be avoided because of the high risk involved, said National Stock Exchange's chief Ashishkumar Chauhan in a message to investors.

Futures and options trading in India has seen an unprecedented rise in recent years with derivatives volumes now over 400 times of cash-trading volumes.

In most global markets, derivatives volumes account for 5-15x their cash market volumes.

In India today, however, derivative volumes are more than 400x higher than that of the underlying cash market today, having grown from 3x in 2010, according to an Axis Securities report.

Total derivatives volumes at over $4.3 trillion per day are roughly 125 percent of the underlying companies’ market capitalisation.

"Muhurat Trading at the National Stock Exchange is a testament to our shared financial aspirations. Each trade made during this auspicious time promises growth and the spirit of unity among investors. NSE encourages investors to deal only with registered intermediaries and refrain from dealing in unregulated products," he said.

He further added, "The stock market is meant for long-term wealth creation. An unpleasant experience disheartens the affected investors to enter the stock market ever again. Trade in derivatives by retail investors should be avoided because of the high risk involved in derivatives. Be a long-term player."

Indian share market kicked off the Samvat year with a bang, with benchmark NSE Nifty 50 rising 110 points to 19,530 during Diwali Muhurat trading. BSE Sensex gained 370 points to 65,275. Bank Nifty was buoyant too, gaining 180 points to 44,000.

"This is the best way to participate in India's growth story. May the trades be favourable, the investments be fruitful, and the spirit of Diwali guide us toward abundance and financial success," Chauhan said.