I have heard many a times from @nithin and many others that derivatives drive maximum volume on exchanges ( upwards of 90% ) but i recently checked the turnover data at NSE website and got completely confused to see maximum volume and turnover is from Equity. Has this trend changed recently or am I getting something wrong ?
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Check this
What you see as the NSE and BSE CM settlement value is essentially the equity delivery volumes. The rest is F&O, intraday (speculative types). If you add turnover across all exchanges and segments - NSE, NSE FO, NSE Currency, BSE FO, BSE Currency, MCX, and then look at equity delivery volumes as a % of this number, you will see it is quite less.
For example, on 21st June, 3.6lk crores across all exchanges were total turnover. Out of this only 20k crores was equity delivery trades. (this is considering index turnover as premium turnover).
That said there has also been a change in the trend of increasing equity trading volumes due to restriction on intraday leverages that is moving folks from futures to trading stocks, and also due to influx of many first-time traders.
Also when I say 90% and over, what I mean is that most trading is speculative (F&O and intraday equity) and equity delivery volumes minuscule.
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Is the trend same in developed markets as well like US.
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Retail trading turnover as a % of overall turnover is going up in almost all markets. Almost the entire world is in an equity bull market and interest rates on bank deposits at all-time lows. So this has meant that a lot more first-timers coming to the markets. Equity is a lot easier to understand than derivatives. So yeah, similar trend everywhere.
In the US there has been a massive surge in options trading. The US has a weird rule around pattern day trading which gets applied if you trade more than 5 times a week when trading stocks (in margin accounts or trading stocks with leverage), but not applicable if you are trading options. 
Once a pattern day trader, you need to maintain at least $25k. Most beginner traders don’t have $25k, hence moving many quickly to options.
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Thank you @nithin. Just a silly follow up.
I may be wrong but I think from an regulator and an exchange point of view, risk management is lot easier for them in derivatives compared to equity intraday. In your opinion is it due to this reason than SEBI introduced these new margin rules as some of the brokers were providing crazy leverage for intraday stock trading and the risk management at exchanges were going haywire.
Ah no, risk management is easier on intraday stocks than on futures or short options. Short options especially is probably the riskiest in terms of risk management since they carry unlimited risk and liquidity in option contracts can suddenly dry up. Of course, long options is the safest, as long as the broker collects the entire premium upfront.
SEBIs regulation came through because brokers were offering crazy leverage across intraday stocks and F&O. Some of the brokers who went bust, client defaulting due to these intraday leverages, was one of the reason.
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Just a follow up question. Some of the prop traders i interact with are complaining about lack of margins from there firms. The reason they are citing for this is peak margins etc. But I think brokers (prop desk) have to place full margins on exchanges from starting. So what’s the issue that they have lowered margin access for their traders. Were they doing something grey which is now not allowed by regulators.
Yeah, one grey bit brokers could do earlier is that for intraday they could potentially use customer funds for their own prop intraday trades (there was no intraday margin reporting before, only overnight). But with peak margin regulation now this gets tracked. So brokers even for intraday need to make sure they have their own margins now.
^This could be the reason for prop traders complaining about margins.
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