Informist, Friday, Jul 26, 2024

MUMBAI – The Securities and Exchange Board of India's study released on Wednesday about intra-day trading losses and profits by individual investors in the cash market will potentially have only limited regulatory implications, a team of Kotak Securities' Institutional Equities Research said today in a note. The main finding from the study was that 71% of individuals who did intra-day trading in the cash market in 2022-23 (Apr-Mar) incurred losses.

Past measures such as peak margin norms have already curtailed the leverage available in intra-day trades, the brokerage said. "The regulator has been actively taking action against players that provide unregulated stock advice," it said.

The brokerage said there was no certainty that if intra-day traders shifted to creating stock portfolios which are held for a longer duration, their profitability would be better than intra-day and futures and options trades.

The brokerage said that the share of retail loss-makers of over 70% in intra-day cash market trading is not materially lower than the 90% share of loss-makers in equity futures and options trading as highlighted in a previous SEBI study. But the average loss for the loss-maker in cash market trading was only around 2,000 rupees, as against 80,000 rupees in futures and options, the brokerage said.

It said that the aggregate losses of 15-20 bln rupees in intra-day cash market trades specified in the latest SEBI study are much lower than that of around 300 bln rupees in futures and options trading specified in the previous study covering trading data for 2021-22. Further, the retail participation in the cash market has not grown as fast as in equity options trading, the brokerage said. End

Reported by Rajesh Gajra

Edited by Tanima Banerjee

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