The number of people trading in India’s commodity derivatives market has jumped by nearly 60% in FY26, even as the ranks of equity futures and options (F&O) traders have thinned considerably. The trend was flagged by Nithin Kamath, co-founder and chief executive of Zerodha, in a post on X.
Kamath drew attention to rising activity on the Multi Commodity Exchange (MCX). He asked whether sharp swings in gold, silver, crude oil and natural gas are pulling traders away from equity derivatives.
Shift in numbers
According to the figures Kamath shared, equity F&O traders fell from 1.06 crore in FY25 to 85 lakh in FY26, a drop of nearly 20%.
Over the same period, commodity traders rose from 13 lakh to almost 21 lakh, an increase of about 62%.
Kamath described the rise in commodity traders as interesting. He said he believes it coincides with the growth of options trading on MCX.
Volatility and late trading hours
Kamath also suggested that price volatility could be a factor. He said he wondered how much of the increase came from heightened volatility in crude, natural gas, gold and silver, and from brokers pushing commodity options more after equity markets close.
Timing matters here. Equity derivatives trading ends in the afternoon, while MCX allows trading in several commodities until almost midnight. That gives traders a chance to take positions on developments in international markets after domestic stock markets have shut.
Gold and silver prices are shaped by global economic developments, interest rate expectations and geopolitical uncertainty. Crude oil and natural gas prices respond to international supply disruptions and shifts in demand.
Sharp moves in these commodities can create openings for short-term traders. They also raise the risk of losses.
Tighter rules in equity derivatives
The rise in commodity participation comes as India’s equity derivatives segment has gone through major regulatory changes. The Securities and Exchange Board of India (Sebi) has brought in measures such as larger contract sizes and curbs on weekly index derivatives expiries. These steps aim to address worries about retail participation and trading losses.
Kamath has earlier questioned whether higher securities transaction taxes and other steps meant to curb speculation could have unintended effects.
In a post on October 28, he argued that higher transaction costs and margin requirements may have nudged some traders towards riskier options strategies. He also noted that buying options needs a smaller upfront payment than trading futures or selling options, which makes them easier for retail participants to access.
What it means
The numbers point to a clear change in where retail traders are placing their bets. Equity F&O has lost participants under stricter rules, while commodity options on MCX appear to be gaining them. Kamath has not claimed a single cause, but he has pointed to a mix of product growth, volatile prices, longer trading hours and broker promotion as possible reasons.
The same features that attract traders to commodities, namely sharp price moves and late-evening trading, also carry the risk of heavy losses for those who trade short term.
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