Algos Take Over: Automated Trading Becomes the New Normal in Indian Markets

In a major shift shaping the Indian stock market, algorithmic trading — commonly known as algos — has become the dominant force, especially in the equity derivatives (F&O) segment. Data from the National Stock Exchange (NSE) reveals that algos now contribute nearly 70% of all futures and options trades in FY25. Even in the equity cash segment, algorithmic trades made up 57% of the total volume in April.

“Algos accounted for 57% of all trades in the equity cash segment in April, rising from 54% in FY25,” according to NSE data.

This surge marks a significant transformation from just a few years ago. Until FY23, the share of algorithmic trading in the equity cash market was below 50%, highlighting the rapid rise in automated strategies being adopted by various investor categories — from institutions to high-frequency traders.

What Are Algos and Why Are They Taking Over?

Algorithmic trading refers to the use of computer programs and software to automate the buying and selling of securities. These programs are designed to follow pre-set rules based on timing, price, quantity, or even complex mathematical models.

Simply put, algos can trigger a buy or sell order — or even execute a complex trading strategy — without any manual intervention, as soon as certain market conditions are met.

This automation brings speed, efficiency, and accuracy, which human traders often find hard to match, especially in high-volume segments like F&O. It’s no surprise that more market participants are shifting towards this technology-driven trading model.

F&O Segment Sees Deepest Algos Penetration

While the equity cash market has seen steady growth in algo trades, it’s the F&O segment where the transformation is more pronounced. NSE data shows that:

• In FY25, 70% of trades in the F&O market were algorithmic.

• In April 2025 alone, this figure stood at 69%, slightly lower but still higher than in previous years.

This trend indicates how algos have established a strong foothold in high-volume, fast-paced segments of the market.

Why Is This Important for Indian Investors?

The increasing dominance of algorithmic trading has reshaped market behavior. Prices may now move more rapidly in response to programmed triggers. For retail investors, this means:

• Tighter spreads and more liquidity, as algos continuously place and adjust orders.

• A need to understand how these automated systems influence price movements, especially in F&O.

• Potential market volatility, as multiple algos can react to the same event at the same time.

Algorithmic trading is no longer limited to big institutions. It’s becoming more accessible and is likely to influence even retail participation in the near future.

Final Thoughts

The rise of algorithmic trading in India’s stock market is not just a trend — it’s a transformation. With 57% of equity cash trades and 70% of F&O trades now driven by algos, the market has entered a new era of automation and speed.

As NSE data continues to reflect this growth, market participants — both big and small — must adapt to this new normal. Understanding how algos work and their growing role in the market is crucial for every investor.