Retail, HNI traders hit record stock futures bets amid mid/smallcap rally

Retail and high networth traders have piled on bets in stock futures at record levels, encouraged by the bullish momentum in mid and smallcap stocks and the Nifty's range-bound moves.

Their net open positions in stock futures - calculated as a net of long or bullish and short or bearish bets on stock futures were at 28.57 lakh on Friday, slightly lower than Thursday's record open position of net 28.59 lakh, as per data from NSE.

"The client side, consisting of retail and HNI players have shown record activity in stock futures trading, as the headline indices have been moving in a narrow range, limiting index trading opportunities," said Chandan Taparia, head of technical and derivatives research at Motilal Oswal Financial Services.

The Nifty has remained in a broad range of 22,300-24,800 since the start of the West Asia conflict in late February. After dipping in March, the index has recovered some of its losses and is still 5.8% down since the conflict. The Nifty Midcap 150 and Smallcap 250 are up 3% and 5.6% respectively, since late February.

Taparia said midcap and smallcap indices have been outperforming the Nifty and Sensex, with several stocks touching all-time highs and seeing strong trading activity.

"While benchmark indices continue to be impacted by FII selling and geopolitical uncertainty, mid and smallcap stocks are being driven more by domestic factors, which is leading to higher participation in stock futures in these segments."

Retail traders, whose positions make a majority of these volumes, are riding the momentum, said Vipin Kumar, AVP- derivatives and technical research at Globe Capital Market.

"During the last week of March and the first week of April 2026, we saw record net long open positions by clients and record net short positions by FIIs in Index futures. But right now, the lack of momentum (rangebound trading) in indices is causing this shift by retail clients from index futures to stock futures," he said.

Foreign investors, who usually bet on index futures in India, have largely remained short or bearish on the headline indices since the start of the year. The Long Short Ratio of foreign portfolio investors, a measure of their bullish bets versus bearish, was at nearly 14% on Friday, showing they remain predominantly pessimistic.

Elevated trading volumes among domestic individual traders come despite the attempts by the government and the capital markets regulator to tamp down activity in the local futures and options market.

The government had raised the securities transaction tax (STT) on futures to 0.05% from 0.02%, a 150% increase.

"Higher volatility typically leads to higher trading activity. This is why, despite a higher STT, we are seeing increased trading activity and higher open positions by participants," said Kumar.

That said, their net open positions in index futures, stock and index options are still lower than the levels seen in late 2024 and early 2025.

"This could be because stock options are not as liquid as futures and key traders avoid options due to theta or time decay, which reduces the value of options as one moves close to expiry," said Taparia.