While foreign portfolio investors (FPIs) and proprietary traders reaped profits, individual traders bore the brunt of these losses. In FY24 alone, individuals incurred a net loss of approximately Rs 75,000 crore.
The study found that more than 1 crore individual traders, or 92.8% of the total, lost an average of Rs 2 lakh each in F&O trading over the three-year period. The top 3.5% of loss-makers, representing around 4 lakh traders, faced an average loss of Rs 28 lakh per person.
Despite these losses, over 75% of loss-making traders continued to participate in F&O trading, highlighting the allure and risks associated with derivative trading.
The SEBI study also highlighted the significant participation of young traders in the F&O market, with their proportion increasing from 31% in FY23 to 43% in FY24. However, a majority of these young traders, close to 93%, incurred losses, emphasizing the need for financial education and risk awareness among this demographic.
While the report paints a bleak picture for individual traders, it also revealed that proprietary traders and FPIs earned substantial profits in the F&O segment. Algo entities, which use algorithmic trading strategies, accounted for a significant portion of these profits, underscoring the growing role of technology in financial markets.
SEBI has been taking steps to curb speculative trading in index derivatives, including restricting multiple option contract expires and raising the size of options contracts. As the F&O market continues to evolve, it remains crucial for investors to exercise caution and understand the risks associated with derivative trading.
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