Post-COVID Surge in Intraday Trading: SEBI Study Unveils New Trends

The Securities and Exchange Board of India (SEBI) has released a comprehensive study revealing significant changes in intraday trading trends following the COVID-19 pandemic. The analysis, which spans fiscal years 2019 to 2023, highlights a dramatic increase in participation, demographic shifts, and concerning financial outcomes for individual traders.

Key Takeaways

• Surge in Participation: Intraday traders increased from 1.49 million in FY19 to 7.83 million in FY22, before slightly declining to 6.89 million in FY23.

• Financial Performance: 71% of intraday traders reported losses in FY23, up from 65% in FY19.

• Demographic Changes: The percentage of traders under 30 years old rose from 18% in FY19 to 48% in FY23, while female participation decreased from 20% to 16%.

• Geographic Expansion: Participation from Tier-1, Tier-2, and Tier-3 cities increased significantly, indicating broader market engagement.

• Trading Patterns: The share of very small traders (annual turnover < INR 50,000) doubled from 27% in FY19 to 56% in FY23.

Surge In Participation

The SEBI study indicates a remarkable increase in the number of individual intraday traders. Before the pandemic, in FY19, there were approximately 1.49 million traders. This number skyrocketed to 7.83 million in FY22, reflecting a surge in interest during the pandemic lockdowns. However, the number slightly decreased to 6.89 million in FY23, suggesting a stabilization in market participation.

Financial Performance Concerns

Despite the increase in participation, the financial outcomes for many traders are alarming. In FY23, a staggering 71% of intraday traders reported losses, a significant rise from 65% in FY19. This trend raises concerns about the risks associated with intraday trading, as more individuals enter the market without adequate knowledge or experience.

Demographic Shifts

The demographic profile of intraday traders has undergone notable changes:

• Age: The proportion of traders under 30 years has surged from 18% in FY19 to 48% in FY23, indicating a younger demographic entering the trading space.

• Gender: Conversely, the participation of female traders has declined from 20% to 16% over the same period, highlighting a potential area for improvement in attracting women to the market.

Geographic Expansion

The study also reveals a significant geographic spread in trader participation. The number of traders from Tier-1 cities has tripled, while those from Tier-2 and Tier-3 cities have increased fivefold and tenfold, respectively. This expansion suggests that interest in intraday trading is no longer confined to major metropolitan areas, but is reaching a wider audience across the country.

Trading Patterns

The analysis of trading behavior shows a marked increase in participation from smaller investors. The share of very small traders, defined as those with an annual intraday turnover of less than INR 50,000, has doubled from 27% in FY19 to 56% in FY23. This trend may be attributed to the accessibility of trading platforms and the allure of quick profits.

Conclusion

The SEBI study underscores a significant transformation in the landscape of intraday trading in India post-COVID. While participation has surged, the rising number of loss-making traders highlights the need for enhanced education and support for individual investors. As the market continues to evolve, regulators and market participants must prioritize the development of resources to help traders navigate the complexities of intraday trading effectively.

Sources

• SEBI Study Reveals Dramatic Shift in Intraday Trading Trends Post-COVID, Investing.com India.