The Indian options market is touted as a very large, liquid options market. The reality however is that the Indian options market is extremely skewed with a vast majority of the liquidity and volumes only in NIFTY options. The single stock options market remains without depth and liquidity and has not grown as would be expected from a mature market.
Stock options are a very important tool for both investment and portfolio hedging and are actively used by investors and market participants globally. Access to stock options enables investors to mitigate stock specific risk as opposed to simply broad market systematic risk by the use of Index options.
The lack of growth of stock options in India can be partially attributed to certain regulatory factors. This paper discusses these factor and offers suggestions on change.
I presented this paper to SEBI via a brokers association in India as well as discussed this with the exchanges several years ago. However nothing came of it. I do expect this will be resolved in the years to come.
The full paper can be viewed here: