Equity Trading Slows Down in FY26 as Cash Volumes Drop and F&O Growth Tapers

In the financial year 2025-26 (FY26), domestic equity trading activity experienced a moderation. 

This was characterised by a decline in cash market turnover and subdued growth in derivatives, influenced by regulatory tightening and weak market performance. 

Performance of Cash and Derivatives Volumes 

The average daily turnover (ADTV) in the equity cash segment across the National Stock Exchange (NSE) and BSE dropped 6% year-on-year to ₹1.13 trillion, down from ₹1.21 trillion in FY25.  

In contrast, the combined ADTV in the futures and options (F&O) segment saw a modest rise of 4.6% to ₹447 trillion. However, the NSE showed signs of strain, with F&O turnover declining by 18%. 

Factors Influencing Trading Activity 

Several regulatory changes over the past 18 months, such as the one-exchange-one weekly expiry framework, stricter upfront margin requirements, and higher lot sizes, have dampened derivatives participation.  

Additionally, market performance was a drag, with the Nifty50 declining 5.1% and the Sensex falling 7.1% during FY26. 

Shift in Trading Behaviour 

Despite lower volumes, average trade sizes increased across exchanges, indicating a shift towards higher-value transactions.  

On the NSE, the average trade size rose to ₹31,545 from ₹29,046 a year earlier, while on the BSE it increased to ₹22,822 from ₹18,720.  

BSE also emerged as a relative gainer, with its notional market share rising from 38% in September 2025 to 44% in March 2026. 

Read More: RBI Extends 450 Day Export Credit Window and 15 Month Realisation Norms till June 2026! 

Impact of RBI Norms and STT Hike 

Upcoming changes from the Reserve Bank of India (RBI), particularly revised norms on bank guarantees effective July 1, could tighten leverage. Nearly 35% of industry margins are backed by fixed deposits and bank guarantees.  

The increase in securities transaction tax (STT) on derivatives is also expected to influence trading patterns. STT on futures has been raised from 0.02% to 0.05% of traded value, while the tax on options premium has increased from 0.1% to 0.15%. 

Conclusion 

The moderation in equity trading activity in FY26, marked by a decline in cash volumes and slower F&O growth, reflects the impact of regulatory changes and market performance. The shift towards higher-value transactions and the influence of RBI norms and STT hikes are key factors shaping the trading landscape. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

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