Indian Economy Question in UPSC Prelims 2025 on India Equity Options boom
Q. Consider the following statements:
India accounts for a very large portion of all equity option contracts traded globally, thus exhibiting a great boom.
India’s stock market has grown rapidly in the recent past, even overtaking Hong Kong’s at some point in time.
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?
✅ Correct Answer: A. I and II only
Explanation:
Statement I: ✅ Correct – India accounts for a very large portion of all equity option contracts traded globally, thus exhibiting a great boom.” This statement is correct. In recent years, India has seen a massive surge in options trading, particularly in the National Stock Exchange (NSE). India has become the largest equity derivatives market in the world by the number of contracts traded. This boom is fueled by increased retail participation, easy access through mobile trading apps, and speculative behaviour.
Statement II: ✅ Correct – “India’s stock market has grown rapidly in the recent past, even overtaking Hong Kong’s at some point in time.” This statement is also correct. India’s equity markets have witnessed significant growth, especially post-COVID-19. Driven by a strong economy, corporate earnings, and retail investor enthusiasm, India’s market capitalisation surpassed Hong Kong’s briefly, making it one of the top global stock markets by value. This reflects India’s growing influence in global finance.
Statement III: ❌ Incorrect – 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.” This statement is incorrect. India has a well-established regulatory framework under SEBI (Securities and Exchange Board of India), which actively regulates stock markets. SEBI issues investor warnings, regulates brokers and advisors, and has taken steps to protect retail investors from the risks of unregistered advisors and speculative trading. Therefore, this statement is factually wrong.
