Who Is Really Driving Dalal Street? Just 2.6% Investors Account For 92% Of Cash Market Turnover

India’s equity market may be adding investors at a rapid pace, but actual trading activity remains heavily concentrated among a small group of large participants. In other words, while more people are entering the market, most of the trading is still being driven by a small set of high-value participants. Data from NSE’s June 2026 edition of Market Pulse shows that investors with monthly trading turnover of more than Rs 1 crore accounted for nearly 92 per cent of cash market turnover, even though they formed only 2.60 per cent of active investors.

This concentration is happening even as market participation has risen sharply over the years. India’s demat accounts have grown more than five times, from around 4.08 crore in FY20 to over 22.50 crore by FY26, driven by a strong post-pandemic retail boom.

Fewer Active Traders, Higher Turnover

The number of active investors in the cash market declined 4 per cent month-on-month to 1.09 crore in May 2026. At the same time, average daily turnover (ADT) in the cash segment rose 5 per cent from the previous month to Rs 1.42 lakh crore.

This was the third straight month of increase and took cash market activity to its highest level in nearly two years.

The gap between participation and turnover shows that trading has become more concentrated. Fewer investors were active during the month, but those who stayed in the market executed larger trades.

Bigger Trades, But Participation Still Narrow

Average trade size in the NSE cash market stood at around Rs 35,803 in May, up 28 per cent from the same month last year. However, on a sequential basis, it was slightly lower than April’s Rs 36,057, though it remained close to recent highs.

Mainboard equities continued to dominate market activity, accounting for nearly 96 per cent of total cash market turnover and growing 5.5 per cent in May 2026.

Exchange-traded funds (ETFs), on the other hand, continued to lose market share. ETF turnover declined 7.70 per cent during the month, bringing their share down to around 3 per cent from nearly 11 per cent in January 2026.

The SME segment remained small, accounting for just 0.20 per cent of average daily turnover, though activity in the segment rose 22 per cent from April.

Derivatives Activity Slows After STT Hike, Easing Volatility

The growing concentration of market activity is coinciding with a slowdown in derivatives trading. The increase in Securities Transaction Tax (STT), which came into effect from April 1, 2026, has weighed on activity, especially in futures and index-based contracts.

Simultaneously, volatility in the market has also eased as geopolitical tensions between the US and Iran cooled following progress in peace talks. India VIX, a key measure of volatility, has dropped more than 53 per cent from March highs to around 13, indicating reduced uncertainty in the market.

STT on futures was increased from 0.02 per cent to 0.05 per cent, a 150 per cent rise in the rate, making it the most significant increase among segments. In comparison, the options premium tax was raised from 0.1 per cent to 0.15 per cent, while the tax on exercise of options moved up from 0.125 per cent to 0.15 per cent.

Average daily turnover in equity derivatives on the NSE across segments fell 19 per cent to Rs 2,24,988 crore during the month, down from Rs 2,77,802 crore in March 2026, when activity had surged amid heightened speculative trading owing to US–Iran war-related uncertainty.

Compared with March levels, equity futures turnover declined 14 per cent, while equity options premium turnover fell 28 per cent.

The decline was more pronounced in index-linked contracts than in stock-specific derivatives. Average daily turnover in Index futures declined 44 per cent from March 2026 levels, while stock futures declined only 6 per cent over the same period. Similarly, within options, index options premium turnover fell 32 per cent, whereas stock options rose 5 per cent.