Average daily premium turnover for Nifty, Nifty Bank and Sensex options over 16 sessions in May was 13% below levels in March, the final month before the 50% STT hike took effect. Trading volumes were also impacted by a fall in volatility amid growing hopes of a US-Iran peace deal.
The recent hike in Securities Transaction Tax (STT) is starting to weigh on trading volumes in the most popular derivatives product: index options. Average daily premium turnover (ADPT) for index options—Nifty, Nifty Bank and Sensex—fell to a combined ₹90,044 crore across the NSE and BSE during the 16 trading sessions leading up to 25 May. Though market volatility remains higher than pre-war levels, it has started to moderate recently, joining the higher tax burden in dampening turnover.
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