Majority Of Individual Intraday Traders In Equity Cash Segment Incurred Losses In FY23: Sebi Study

Interestingly, the average number of trades by loss-makers was higher than the profit-makers. Further, the share of young intra-day traders, with less than 30 years of age, has risen significantly over the period, according to the study released by Sebi on Wednesday.

The markets regulator has conducted a study to analyze the trends in participation and profits and losses in intraday trading by individuals in the equity cash segment. It covered the periods of FY2018-19, FY2021-22, and FY2022-23 to comparatively analyze the trends before and after the pandemic.

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The study, based on a sample of individual clients of the top-10 stock brokers accounting for around 86 percent of the individual client count in the equity cash segment during 2022-23, has been peer-reviewed by a working group with representation from academia, brokers, and market experts.

In its study, Sebi found that around one in three individuals who trade in the equity cash segment, trades intraday. Moreover, the share of young intraday traders, with less than 30 years of age, has grown to 48 percent in 2022-23 compared to 18 percent in 2018-19.

"7 out of 10 individual intraday traders or 71 percent in the equity cash segment incurred a net loss in FY2022-23," the study said, adding that the proportion of loss-makers jumped to 80 percent for traders with very frequent (more than 500 trades in a year) trading activity.

Over and above the trading losses incurred, loss makers expended an additional 57 percent of their trading losses as trading costs in 2022-23, while profit makers spent 19 percent of their trading profits as trading costs. Further, the percentage of loss-makers among younger traders was higher at 76 percent in 2022-23 compared to other age groups.

The Securities and Exchange Board of India (Sebi) believes that the study is expected to enhance awareness among individual traders about the risks involved in intraday trading in the equity cash segment.
Earlier a study by Sebi found that 89 percent of individual traders in the equity F&O segment suffered losses with average losses of Rs 1.1 lakh in FY22.

Additionally, there was an exponential increase in the F&O segment participation during the pandemic, with the total number of unique individual traders increasing by over 500 percent from 7.1 lakh in FY19 to 45.24 lakh in FY21, the study noted.

(Disclaimer: This story has been directly published from agency feed. No changes have been made.)

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