Over 70% intraday traders suffered losses during FY23, reveals Sebi study

Sebi study underscores the risks associated with intraday trading

Over 70 per cent of individual investors who engage in intraday trading incurred an average loss of Rs 5,371 during 2022-23 (FY23), according to a study conducted by the Securities and Exchange Board of India (Sebi).

Intraday trades involve buying and selling securities within the same trading day. The study covered nearly 7 million investors trading in the equity cash segment.

In January 2023, another Sebi study revealed that 90 per cent of active futures and options investors (those trading more than five times a year) have made an average loss of Rs 60,000 crore in 2021-22.

Both studies by the market regulator highlight how the odds are stacked against small investors, who are often lured into equities trading by the prospect of quick gains.

“The study is expected to enhance awareness among individual traders about the risks involved in intraday trading in the equity cash segment,” Sebi said in a press release.

The average daily trading turnover for the cash segment has reached Rs 1.5 trillion so far this month, with about a third of these trades being intraday.

The latest study also points to a surge in investors engaging in high-risk intraday trading.

According to Sebi data, the number of intraday traders among the top 10 brokers — who account for 86 per cent of the market share — has increased fourfold, rising to 6.9 million in FY23 from 1.5 million in 2018-19 (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 after 2019-20,” Sebi observed.

Interestingly, the share of ‘young’ traders — those under 30 years of age — has grown to 48 per cent in FY23 from 18 per cent in FY19.

The study found 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 annually) was even higher at 80 per cent.

The study also revealed that loss-makers conducted more trades on average than profit-makers.

Data also showed that participation in intraday trading has increased in smaller towns and cities compared to top-tier cities.

“Participation from Tier-I, Tier-II, and Tier-III cities has increased 3x, 5x, and 10x, respectively, in FY23 compared to FY19,” the study showed.

The proportion of female traders has declined to 16 per cent in FY23 from 20 per cent in FY19.

Key Highlights

Around 1 in 3 individuals trading in the equity cash segment trades intraday
 

Intraday traders (at top 10 brokers) rose to 6.9 mn in FY23 from 1.5 mn in FY19
 

Share of young intraday traders (age less than 30 years) has grown to 48% in FY23 from 18% in FY19

Proportion of female traders (by intraday trader count) declined to 16% in FY23 from 20% in FY19
 

Participation from Tier-I, Tier-II, Tier-III cities (in the sample) increased to 3x, 5x, 10x, respectively, in FY23 as compared to FY19