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Hi, I Spriha Srivastava, Digital Executive Editor in CNBC International. Welcome to this Inside India.
This week, I consider how the boom in India’s derivative markets have brought a lot of hassle for retail investors, which are usually young and attracted to the promise of rapid profit.
Mumbai, India: Council logo on securities and exchanges of India (SEBI) is observed in the office building in Bandra Kurla (BKC) in Mumbai.
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A great story
A week ago, the Indian markets regulator sent a strong signal, banning the World Trade Firm Jane -States from participating in the local stock market. This step came with notable details: almost $ 570 million profits, allegations of index manipulation and suggestion that the arbitration strategies may have crossed the line.
But as the noise settled and the legitimate return and back begins, the true story can lie elsewhere. This case offers a window into the structure and stress points of India’s options, and what happens when the regulation, technology and the enthusiasm of retail.
For the lifting of trading volumes – something much more delicate: the new generation of retail investors, which are poured into complex financial products, often with little experience and even less protection.
The India derivative market has rapidly increased. According to the Futures Futures Association, nearly 60% of world -wide -derived capital accounts for the country. On paper it looks like a success story. In practice, this is more difficult.
What distinguishes this market is not just its size. This is the one who trades.
Nearly 11 million people According to SEBI, which are traded by futures and options, contracts in the last financial year. The vast majority were first -class, often young and attracted the promise of rapid profit, reinforced on social media platforms and accounts. Many use mobile applications, follow the Telegram channels or imitate strategies that they do not understand until the end. According to market participants, this behavior is becoming more common.
SEBI, based on a recent study of 9.6 million individual capital manufacturers, shows that more than 40% of these traders were up to 30 years, and more than three quarters earned less than 500,000 Indian rupees, or about $ 6,000 a year, Reuters reports.
This means that most participants enter high -scale and risky deals with income buffers and small official market training.
Analysts associate this with strategies that are guided by the impetus, which often influence social media and telegram groups. Instead of leaning on a trades on the basics of a company or profit prospects, many investors appear to respond to market trends and peer activity – a model, usually related to Fomo or are afraid to disappear. As a result, the impact of volatility, especially among inexperienced traders with disabilities, is increased.
The options market has become a hot focus for such high risk, rapid trade development, especially with the growth of weekly terms, which are short -term contracts that end each week. These options are cheaper and more affordable, but also much more risky because they can swing wild for days and even minutes.
Financial impact on YouTube and other platforms help to nourish this trend by managing millions by retailers in India. The focus is on speed and buying volume and the sale of rapid pursuit of short-term income.
Many of these investors trade and use strategies that can unravel daily. If the market is moving even slightly against them, they can lose everything. Although this type of trade is pushing for general market activity, it also increases the chances of heavy losses.
And this is exactly what is happening.
A normative task
According to SEBI, last year more than 90% of trading futures and options in their study lost money. The losses amounted to 1.06 trillion rupees, or about $ 12.5 billion, which is 41% compared to a year earlier.
But this is not just that individual traders lose money. This creates a big problem: if so many investors do emotional or poorly timed rates, it opens the door for professional firms to take advantage of legally and effectively. These institutional players have the best tools, faster systems and more experience, giving them a clear edge.
This is the background that makes Jane -Strito so important.
SEBI has accused the firm of manipulating the index prices to profit from transactions. Jane -Restitis denies this, saying that a standard arbitration strategy, general and legal tactic among professionals is used.
While the case continues and remains in accordance with regulatory reviews, SEBI has not yet issued a final ruling, the incident is illuminated by a growing gap between retail merchants and large institutions. It also raises the key question: is the market too caused by the excitement and short -term impulse?
If so, what happens with the role of the basics, actual performance and value of companies in determining prices? And can the daily investors still trust what the system is fair?
Sebi is in a difficult position. He wants more people to go to markets and more global firms to invest in India. But it should also protect retail investors from overload or operation.
To this end, SEBI has taken some measures, including the minimum trading size, requiring a better disclosure, and this considers the possibility of a weekly time for individual shares.
But the main problem remains: how do you grow up a fast and exciting market without making it dangerous for aliens?
Boom derivatives of India is a great history of financial inclusion and technological scale. But only the scale is not a metric of success. As the market matures, it will be evaluated not only by how many people participate, but also how much it can do it is steadily, without falling.
What is next will not just form an India’s financial future. It can serve as a cautious fairy tale for other markets that are in front of the same more pain.
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Meyer Shankar, a former Indian ambassador to the US, said BRICS, which is India, is not an “anti -American”, pointing out that there are different foreign politicians in state countries.
Meanwhile, Chetan Set, strategist in the Asian Pacific Nomura High appreciation of Indian stocks They were the largest deterrent to foreign investors who are inadequate in the country’s market.
Need to know
The Indian government has ordered the X to block 2355 accounts. The social network owned by Elon Musk said on Tuesday that the country’s electronics and information technology demanded Indian users on July 3 did not allow access to thousands of accountsIncluding the Reuters wired.
Jane -Rate to challenge the prohibition of access to the Indian market. In response to the Securities Council and the exchange of India’s charges is that the firm manipulates derivative markets, Jane -Rate stated that it is holding “The main index -arbrit trade”.
India is on the “top of the list” for the supply chain shifts. In an exclusive interview CNBC TV18, CEO Deutsche Bank Christian Sewing said customers, regardless of size looking for India when reorganization of its production networks.
– Yeo Boon Ping
What happened in the markets?
Indian shares were traded below on Thursday, with Nifty 50 The index is 0.43% below 12:30 local time.
This month, the index consistently closes above 25,000, and has still grown more than 7%, according to LSEG.
The 10-year government bonds in India amounted to 6,315%.
– Lee In Shan
Applicable
July 14: CPI and WPI in June, Distributor of Food and Health Ingredients Chemkart, IPO, Airport F & B Travel Food Services “IPO
July 15: unemployment rate in June, IPO Pharmaceutical IPO BIOSCIENCES
July 17: Office Leastic Firm SmartWorks Coworking Space ‘IPO
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