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Business & Stocks Economic Times Markets • Nov 02, 2026

Why traders are moving from equity F&O to commodities? Nithin Kamath explains market shifts and profitability metrics

💡 Key Takeaways

•Commodity derivatives traders surged 62% YoY to 21 lakh in FY26.
•Equity F&O active participants declined 20% QoQ down to 85 lakh.
•Zerodha's Nithin Kamath cited extended MCX trading hours and volatility as core drivers.

NEW DELHI [NCRBuzz Wire] — **India's retail and institutional trading landscape is undergoing a structural transformation as capital systematically reallocates from equity derivatives into commodity markets.** **According to market data analyzed by brokerage executives, commodity derivatives traders surged nearly 62% year-over-year to reach 21 lakh (2.1 million) active participants in FY26.** **Simultaneously, equity Futures and Options (F&O) participants contracted by 20% to settle at 85 lakh (8.5 million), reflecting mounting regulatory pressures and shifting profitability paradigms.**

### Market Capitalization and Fiscal Metrics Shift

**Zerodha founder Nithin Kamath publicly detailed the underlying market mechanics driving this migration, pointing to distinct structural advantages in the commodity segment.** **The primary catalysts identified include heightened global commodity volatility, the surging popularity of commodity options contracts, and the strategic implementation of extended trading hours on the Multi Commodity Exchange (MCX).** **These fiscal shifts have fundamentally altered risk-return ratios for retail speculators who historically faced severe net losses in the highly saturated equity F&O segment, prompting queries regarding why traders are not profitable in equities versus alternative asset classes.**

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### Regulatory Enforcement and Strategic Outlook

**The Securities and Exchange Board of India (SEBI) has progressively tightened regulatory compliance, margin requirements, and lot sizes across equity derivatives to curb rampant retail losses.** **This regulatory tightening has inadvertently accelerated capital flight toward commodity derivatives, where lower barrier costs and distinct intraday volatility cycles offer alternative profit pathways.** **Financial analysts recommend that market participants closely monitor upcoming SEBI circulars, MCX volume reports, and global macroeconomic commodity price trends to assess the longevity of this asset reallocation trend.**

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🏛️ Background Context

The Indian retail derivatives market has experienced exponential growth over recent years, prompting intense regulatory scrutiny from SEBI regarding systemic financial risks and high retail loss ratios documented in academic and regulatory studies.

💡 Citizen & Commuter Quick Explainer (FAQ)

Q1: Why are traders moving from equity F&O to commodities?

Traders are migrating due to heightened commodity volatility, rising popularity of options, and extended trading hours on the MCX combined with tighter SEBI regulations in equity F&O.

Q2: What was the growth rate of commodity traders in FY26?

Active commodity derivatives traders surged nearly 62% year-over-year to reach 21 lakh participants in FY26.

Q3: How did equity F&O participation change?

Equity Futures and Options participants contracted by 20% to settle at 85 lakh active accounts during the same period.

Verified Wires: Economic Times Markets, Zerodha Market Insights, Multi Commodity Exchange (MCX) Original Wire Dispatch ↗

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