Retail Investors Advised to Avoid Derivatives and Social Media Stock Tips
National Stock Exchange (NSE) CEO and Managing Director Ashish Chauhan has urged retail investors to steer clear of derivatives trading, emphasizing its risks and complexities. Speaking at the Business Today MindRush 2025 event, Chauhan warned that derivatives are unsuitable for retail participants due to their speculative nature.
“If you don’t understand the instrument, don’t touch it. Especially for retail investors, derivatives are not the place to be,” he cautioned.
Chauhan also advised against relying on stock market tips from social media platforms, likening them to mere entertainment rather than sound investment advice.
His remarks come in the wake of a recent study highlighting significant retail investor losses in Futures and Options (F&O) trading. According to the report, 93% of traders in the segment incurred losses, prompting regulatory interventions by the Securities and Exchange Board of India (SEBI). Chauhan noted that SEBI’s new measures have already started showing positive effects.
Despite the concerns, he pointed out that only a small fraction of retail investors engage in derivatives trading. Out of 11 crore investors, just 25-30 lakh trade derivatives monthly, and 88% of them also invest in equities, potentially offsetting losses.
On broader market trends, Chauhan commented on global uncertainties and upcoming US reciprocal tariffs, stating that markets have already factored in the known risks. However, he cautioned that unexpected developments could impact investor sentiment.
Regarding the IPO market, he acknowledged a slowdown over the past six months but remained optimistic about future activity. “There is strong momentum in the IPO space, and several companies are waiting for the right time to launch,” he said.
With increasing retail participation in the stock market, Chauhan’s warning serves as a crucial reminder for investors to exercise caution and make informed decisions.
