MUMBAI: Investors looking to make quick money from stock market without proper knowledge have burnt their fingers by losing their hard-earned money. Nine out of 10 individual traders in equity Futures and Options (F&O) segment incurred losses in financial year 2022, showed a study conducted by the Securities and Exchange Board of India (Sebi). Only a handful people made money as the top 1% of traders cornered 51% of the total profits during the financial year 2022.
“89% of the individual traders in equity F&O segment incurred losses, with an average loss of Rs 1.1 lakh during FY22, whereas 90% of the active traders incurred average losses of Rs 1.25 lakh during the same period,” said the study titled ‘Analysis of Profit and Loss of Individual Traders dealing in Equity F&O Segment’. “During FY22, 11% of individual traders in equity F&O segment made profit with an average profit of Rs 1.5 lakh,” it added.
The top 5% active profit makers accounted for nearly 75% of the total net profit earned by active profit makers. The number of individual traders in the equity F&O segment surged over 500% between FY19 and FY22. There were 7.1 lakh traders during FY19, which increased to 45.2 lakh during FY22. “For the group of active traders, on average, loss makers registered net trading loss close to Rs 50,000 in FY22,” said the study. “During FY22, 89% of the individuals who traded in index options, 82% who traded in stock options incurred average loss of Rs 0.77 lakh and Rs 0.66 lakh, respectively,” it added.
The percentage of loss makers were 74% and 67% for index futures and stock futures with an average loss of Rs 0.96 lakh and Rs 2.1 lakh, respectively. Findings are based on data collected from top 10 brokers accounting for nearly 67% of overall individual client turnover in equity F&O segment during FY22, where the brokers were identified on the basis of largest percentage share of individual investors’ turnover in equity F&O segment. Active traders are individual traders who traded in equity F&O segment over five times during a year. Individual investors include HUFs and NRIs and exclude proprietary traders, institutions and partnerships firms.
Lost cause
Number of individual traders in equity F&O segment up by over 500% between FY19 and FY22
There were 7.1 lakh traders during FY19 which increased to 45.2 lakh during FY22
Rs 1.1 lakh
Average loss for 89% individual traders in F&O segment in FY22
Rs 1.5 lakh
Average profit for 11% individual traders in F&O segment in FY22
5%
Top profit makers accounted for nearly 75% of total net profit
51%
Profit cornered by top 1% active traders in FY22