Over 70 per cent of individual investors who trade intra-day incurred an average loss of Rs 5,371 during the financial year 2022-23 (FY23), reveals a study undertaken by market regulator Securities and Exchange Board of India (Sebi).
Intra-day trades are those that are bought and sold on the same day. The study was conducted on nearly 7 million investors who deal in the equity cash segment.
In January 2023, another Sebi study had shown that 90 per cent of active futures and options (F&O) investors (those who trade more than five times a year) made an average loss of Rs 60,000 crore in FY22.
Both studies by the market regulator underscore how the odds of winning are stacked against small investors, who often get drawn to equities trading with the aspiration of making quick money.
“The study is expected to enhance awareness among individual traders about the risks involved in intra-day trading in the equity cash segment,” Sebi said in a press release.
The average daily trading turnover for the cash segment is Rs 1.5 trillion so far this month. About a third of these trades tend to be intra-day.
The latest study also highlights the spike in investors who take to high-risk intra-day trading. According to Sebi data, the number of intra-day traders at the top 10 brokers—who account for 86 per cent market share—has risen four-fold to 6.9 million in FY23 from 1.5 million in FY19.
This rise has been accompanied by a decline in the average trading ticket size. “There has been a decline in the average trade size of individual traders across trade groups over the years. The average trade size declined to Rs 35,333 in FY23 from Rs 76,205 in FY19, due to the addition of a large number of new traders with low trade size post-FY20,” Sebi said.
Interestingly, the share of “young” traders—those aged less than 30 years—has grown to 48 per cent in FY23 compared to 18 per cent in FY19. The study shows that the proportion of loss-makers among young traders was higher than the overall sample at 76 per cent. Meanwhile, the proportion of loss-makers among “very frequent” traders (those executing more than 500 trades in a year) was even higher at 80 per cent.
Interestingly, the average number of trades by loss-makers was higher than profit-makers, the study showed.
Data also showed the increase in participation in smaller towns and cities was even higher than in top-tier cities. “Participation from Tier-1, Tier-2, Tier-3 cities (from sample) increased to 3x, 5x, 10x, respectively, in FY23 compared to FY19,” the study showed. The proportion of female traders declined to 16 per cent in FY23 from 20 per cent in FY19.
First Published: Jul 24 2024 | 7:11 PM IST
