As many as 70 per cent, or 7 out of 10, individual intraday traders in the equity cash segment incurred net losses in fiscal 2022-23, a study by the Securities and Exchange Board of India (Sebi) said on Wednesday. The study showed 1 in 3 individuals who trade in the equity cash segment, trades intraday. The number of individuals participating in intraday trading in the equity cash segment surged by 300 per cent in FY23 from FY19. Intraday traders, or day traders, square off their position by the end of the day. The study comes a day after Finance Minister Nirmala Sitharaman in the Union Budget 2024-25, announced to double the Securities Transaction Tax (STT) on futures & options (F&O) of securities, in order to curb the exponential rise in volume in the derivative segment. In January 2023, SEBI had said that as many as 89 per cent of the individual traders — 9 out of 10 individual traders — in the equity F&O segment incurred losses with an average loss of Rs 1.1 lakh during FY22. The Sebi’s recent study, which covers the periods of FY19, FY22 and FY23, is based on a sample of individual clients of the top-10 stock brokers, accounting for around 86 per cent of the individual client count in the equity cash segment during FY23. The study analyses trends before and after the pandemic. It said that the number of individuals trading intraday in the equity cash segment has increased from around 15 lakh in FY19 to 69 lakh in FY23, which is a growth of 4.6 times. This surge in participation has been associated with a rise in traders with low turnover, traders who trade less frequently, young traders, and traders from tier-II and tier-III cities. The average number of trades by loss-makers was higher than the profit-makers. During FY23, 76 per cent of individual traders with annual intraday turnover more than Rs 1 crore were loss-makers. Individual traders with annual turnover of more than Rs 1 crore incurred an average profit/loss (-) Rs 34,977 during FY23. Over and above the trading losses incurred, loss makers expended an additional 57 per cent of their trading losses as trading costs in FY23. Profit makers spent 19 per cent of their trading profits as trading costs in FY23. The study showed that the proportion of loss-makers increased to 80 per cent for traders with very frequent (more than 500 trades in a year) trading activity. The share of young intraday traders (age less than 30 years) has grown to 48 per cent in FY23 as compared to 18 per cent in FY19. The percentage of loss-makers among younger traders (age less than 30 years) was higher at 76 per cent in FY23, as compared to other age groups.
