Zerodha co-founder Nithin Kamath recently took to LinkedIn and pushed back against the growing claims of India’s stock market becoming “overleveraged”, especially in options trading. Kamath called the comparisons with the US market “ridiculous” and said they don’t reflect the full picture.
“People often look at the number of contracts traded, not the premiums or the actual value involved,” Kamath wrote, adding, that the “comparison itself is flawed”.
‘India not overleveraged’
He pointed out that while India may be witnessing a rise in retail participation and options trading volumes, it is still far less risky compared to the US. According to him, India’s financial markets are still about 15–20 years behind those of the US in terms of development and scale.
Putting spotlight on how much lower India’s leverage levels actually are, Kamath compared margin funding markets between the two countries. In the US, margin trading (where investors borrow money to invest) has crossed $1 trillion. In contrast, India’s margin trading facility (MTF) market is still under $10 billion, which is just 1% of the US level.
He also pointed the huge difference in stock lending and borrowing. “US stocks shorted are estimated to be another $1 trillion, while in India, the stock lending and borrowing market remains practically insignificant,” he said.
‘Calling US a gambling society wouldn’t be unfair’
Kamath didn’t shy away from criticising the broader American culture of speculation. “Calling the US a gambling society wouldn’t be unfair,” he said, referring to a recent $210 million bet on whether Ukrainian President Volodymyr Zelensky would wear a suit at the NATO summit. “You can bet on anything — from sports and stocks to even what someone might wear.”
He argued that gambling and high-risk speculation are deeply rooted in American society, and that India’s cautious approach to market development stands in stark contrast.
“So this constant narrative that we’re somehow dangerously overleveraged, just because of the number of options contracts traded, feels… well, misguided,” Kamath said.
His comments come at a time when regulatory concerns and media reports have raised alarm over India’s rising options trading activity, especially among retail investors. But as Kamath argues, looking at volume alone doesn’t paint an accurate picture of the actual risk.