Zerodha’s Nithin Kamath Flags 61% Jump in Commodity Traders as Equity F&O Participation Falls

Key Takeaways

• The number of individual commodity traders on MCX increased 60.8% to 20.9 lakh in FY26, from 13 lakh in FY25.
• Individual equity F&O traders on NSE declined 19.8% to 85 lakh, compared with 1.06 crore a year earlier.
• MCX commodity traders increased their share relative to NSE equity derivatives participants from 12.3% to 24.6%.
• Nithin Kamath identified growing commodity options activity, price volatility and extended trading hours as possible reasons for the increase.
• NSE data for Q2 FY27 also showed strong growth in commodity derivatives turnover, particularly in options.

Commodity Traders Increase 61% on MCX

India’s commodity derivatives market is witnessing a notable increase in individual participation. According to figures shared by Zerodha co-founder and CEO Nithin Kamath, the number of clients trading commodity futures and options on the Multi Commodity Exchange (MCX) rose to 20.9 lakh in FY26.

This compares with approximately 13 lakh traders in FY25, representing an increase of 7.9 lakh participants, or around 60.8%.

The increase comes at a time when participation in India’s equity derivatives market has moved in the opposite direction.

The number of individual investors trading equity derivatives on the National Stock Exchange (NSE) declined from 1.06 crore in FY25 to 85 lakh in FY26. That represents a fall of approximately 21 lakh traders, or 19.8%.

The contrasting figures suggest that commodity derivatives are becoming a more prominent part of India’s retail trading landscape, even as equity F&O participation contracts.

Commodity and equity F&O participation

Indicator	FY25	FY26	Change
MCX commodity traders	13 lakh	20.9 lakh	+60.8%
NSE individual equity F&O traders	1.06 crore	85 lakh	-19.8%
MCX traders as a share of NSE equity F&O traders	12.3%	24.6%	Nearly doubled

The comparison uses trader counts from two different exchanges and market segments. It does not establish that the same individuals have moved from equity derivatives into commodity trading.

What Nithin Kamath Says Is Driving the Trend

Kamath described the increase in commodity market participation as interesting, particularly because equity F&O participation has declined.

In a post on X on November 2, he highlighted three possible factors behind the increase.

1. Growth in commodity options trading

Kamath suggested that the increase could coincide with the expansion of options trading on MCX.

Commodity options allow traders to take positions based on expected price movements in underlying commodities. They have become another route for market participants seeking exposure to assets such as gold, silver, crude oil and natural gas.

The growth of options activity may be contributing to the increase in the number of individual commodity traders.

2. Higher volatility in commodity prices

Kamath also pointed to increased volatility in commodities such as crude oil, natural gas, gold and silver.

These markets can respond to several factors, including geopolitical developments, supply disruptions, currency movements, interest-rate expectations and changes in global demand.

Large price movements can create trading opportunities for derivatives participants. However, volatility can also increase the speed and scale of losses, particularly when traders use leverage.

3. Longer trading hours on MCX

Another factor highlighted by Kamath was MCX’s extended trading schedule.

Commodity derivatives trading continues until almost midnight, allowing participants to react to international market developments after Indian equity markets have closed.

This creates a longer trading window for people who want exposure to global commodity price movements.

Kamath also wondered whether brokers were promoting commodity options more actively after regular equity market hours. This was presented as a possibility rather than a confirmed industry-wide finding.

NSE Data Also Shows Strong Commodity Derivatives Activity

The increase in trader numbers is accompanied by rising activity in commodity derivatives.

The National Stock Exchange’s October 2026 Market Pulse report highlighted a shift in derivatives market activity during the second quarter of FY27.

According to the report, average daily turnover in commodity futures increased 38% quarter-on-quarter during Q2 FY27. Commodity options turnover rose even faster, increasing 116% over the same period.

September 2026 also recorded strong activity in both segments, with commodity futures and options reaching their highest monthly average daily turnover levels on the exchange.

Energy contracts accounted for a particularly large share of trading activity. Crude oil and electricity futures together represented 94% of commodity futures turnover on the NSE in September.

In the options market, crude oil options accounted for 97% of total commodity options premium turnover.

These figures indicate that the growth is not limited to the number of traders. Trading activity in several commodity contracts has also increased.

However, turnover and trader participation measure different things. A rise in turnover can reflect larger trades, more frequent trading or changes in contract activity, rather than simply an increase in the number of investors.

Equity Derivatives Participation Faces a Different Trend

While commodity derivatives have expanded, India’s equity F&O market has faced declining participation following regulatory and taxation changes.

The Securities and Exchange Board of India (SEBI) introduced measures intended to reduce excessive speculative activity in equity derivatives. These included changes to contract sizes, expiry structures and other trading requirements.

The government also increased securities transaction tax (STT) on certain futures and options transactions.

Kamath has previously argued that such measures can produce unintended consequences by changing how traders participate in financial markets.

In an October 2026 discussion, he suggested that higher transaction costs and other restrictions may have encouraged some traders to move towards different trading strategies and products.

He has also highlighted differences in profitability across trading categories on Zerodha’s platform, noting that only a relatively small proportion of individual options buyers were profitable.

These observations are relevant to the wider derivatives market debate, but they do not establish that regulatory changes caused the increase in commodity trading.

Other factors, including global commodity volatility and the availability of new trading products, may also be contributing.

What the Numbers Mean for Retail Traders

The increase in commodity trading participation does not necessarily mean that commodities are safer or more profitable than equity derivatives.

Commodity futures and options involve leverage and can expose traders to rapid price movements. Gold and silver can respond to changes in global interest rates and currency movements, while crude oil and natural gas can react sharply to geopolitical developments and supply disruptions.

Options also involve additional risks, including time decay and changes in implied volatility. Traders can lose the entire premium paid when buying options, while certain option-selling strategies can involve substantially larger potential losses.

The extended trading hours on MCX provide more opportunities to respond to international developments, but they also mean that prices can move outside regular equity market hours.

For retail participants, understanding contract specifications, margin requirements, expiry dates and risk exposure is essential before entering commodity derivatives.

A higher number of participants should not be interpreted as evidence that more traders are making money.

The Bigger Picture

The contrasting participation trends highlight how India’s derivatives market is evolving. Equity F&O trading has come under greater regulatory and taxation pressure, while commodity derivatives are benefiting from increased activity in options and volatile global commodity markets.

The development also matters for brokerage platforms and exchanges. As trading activity changes across segments, brokers may increasingly compete for customers through commodity products, extended trading access and derivatives services.

However, the rise in commodity participation should be viewed alongside the risks of leveraged trading. The number of traders, the volume of contracts and the profitability of those traders are three different measures. Understanding those distinctions is important when assessing whether the market’s growth represents broader investor participation or simply more speculative activity.

Looking Ahead

Future data from MCX, NSE and brokerage platforms will help establish whether the increase in commodity participation is a sustained shift or a response to unusually volatile market conditions. The distribution of activity across individual commodities, futures and options will also be important in understanding what is driving the expansion.

For regulators, the development reinforces the need to examine how changes in one segment can influence behaviour elsewhere in the derivatives market. For retail traders, the central consideration remains risk management: increased market activity does not guarantee better returns, and leveraged commodity contracts can produce substantial losses.