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UPSC Prelims 2025GS1EconomyIndian Stock Market and Options Trading

Q38. Consider the following statements:
I. India accounts for a very large portion of all equity option contracts traded globally thus exhibiting a great boom.
II. India’s stock market has grown rapidly in the recent past even overtaking Hong Kong’s at some point of time.
III. There is no regulatory body either to warn the small investors about the risks of options trading or to act on unregistered financial advisors in this regard.

Which of the statements given above are correct?

A. I and II only✓ Correct
B. II and III only
C. I and III only
D. I, II and III

Detailed Solution

✓ Correct Answer: Option A
✓ Statement I is correct
India has indeed seen a significant boom in equity options trading, accounting for a very large portion, sometimes over 80%, of global equity options contracts traded. This reflects high retail participation and liquidity in the Indian derivatives market.
✓ Statement II is correct
India's stock market has experienced rapid growth, and in early 2024, its market capitalization surpassed Hong Kong's, making it the world's fourth-largest stock market.
✗ Statement III is incorrect
India has a robust regulatory body, the Securities and Exchange Board of India (SEBI), which actively regulates the securities market. SEBI issues warnings to investors about the risks of options trading and takes action against unregistered financial advisors to protect small investors. Therefore, statements I and II are correct. The growth and regulation of India's financial markets are important topics for UPSC Economy.

Current Affairs Link

Recently, the growth in the Indian financial market was covered in the news.

All Economy Questions →All Indian Stock Market and Options Trading Questions →← Back to Full Paper

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