A new study by the Securities and Exchange Board of India (SEBI) has highlighted significant risks associated with intraday trading in the equity cash segment, revealing that over 70% (7 out of 10) of individual traders experienced losses in the fiscal year FY23. The study also noted a dramatic increase of more than 300% in the number of individual intraday traders compared to FY19.
The SEBI study, which analyzed trading trends and financial outcomes for individual traders, has been peer-reviewed by a working group comprising academics, brokers, and market experts. It focuses on three fiscal years—FY19, FY22, and FY23—to assess the impact of the Covid19 pandemic on trading behaviors.
Key findings from the study include:
- Approximately one-third of individuals trading in the equity cash segment are engaged in intra-day trading.
- The number of intraday traders surged by over 300% in FY23 compared to FY19.
- The share of young intraday traders (under 30 years) increased significantly, reaching 48% in FY23 from 18% in FY19.
- A substantial 71% of individual intra-day traders incurred net losses in FY23.
- Among traders with very frequent trading activity (more than 500 trades per year), the proportion of loss-makers rose to 80%.
- Younger traders (under 30) had a higher loss rate of 76% compared to other age groups.
- Loss-makers conducted more trades on average than profit-makers.
- In addition to trading losses, loss-makers spent an extra 57% of their losses on trading costs, while profit-makers spent 19% of their profits on such costs.
The study aims to raise awareness about the financial risks involved in intraday trading and provide valuable insights into the trading patterns and outcomes among individual investors. It is distinct from a previous SEBI report on Futures and Options (F&O) trading released on January 25, 2023.
STT on F&O hiked
Interestingly the stude is released a day after the Govt hiked the tax – STT on Futures & Options trade. The STT or the Securities Transaction Tax on Option sale has been hiked to 0.1% from 0.0625% of the Option Premium. Similarly for Futires, the tax is now raised to 0.02% from 0.0125% of the trading price of the future.