SEBI study warns against intra-day trading risks in equity cash as young traders rise

Mumbai: The share of young intra-day traders (age less than 30 years) grew 48 per cent in FY2022-23 as compared to 18 per cent in FY2018-19, a study by markets regulator Securities and Exchange Board of India (SEBI) said on Wednesday, warning against the risks involved with intra-day trading in equity cash segment.

Around one in three individuals who trade in the equity cash segment, now trades intraday. The study also noted a surge of over 300 per cent in the number of individuals participating in intraday trading in the equity cash segment in FY23 compared to FY19.

According to the findings, more than 70 per cent (seven out of 10) of individual intraday traders in the equity cash segment have incurred losses in FY2022-23.

The study is expected to enhance awareness among individual traders about the risks involved in intraday trading in the equity cash segment, the SEBI said.

Peer-reviewed by a working group with representation from academia, brokers and market experts, the study 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 FY 2022-23.

"Proportion of loss-makers increased to 80 per cent for traders with very frequent (more than 500 trades in a year) trading activity. The percentage of loss-makers among younger traders (age less than 30 years) was higher (76 per cent in FY23) as compared to other age groups," the study noted. Over and above the trading losses incurred, loss makers expended an additional 57 per cent of their trading losses as trading costs in FY2022-23.

In a bid to foster a more stable and mature investment environment, the government in the Union Budget 2024 has announced an increase in security transactions tax (STT) on futures and options trading, which is in line with the suggestions made by the Economic Survey 2023-2024.