Understanding High-Risk Trading in India: A Sebi Report

91% of Individual Traders Faced Losses in FY25

India’s stock market has been challenging for small investors. A recent Sebi report reveals that 91% of individual traders experienced losses in the financial year 2024-25. This is despite efforts to control risky trading.

What the Regulators Are Doing

Sebi’s data shows that recent reforms haven’t yet protected most traders. The regulator pointed out that India has a high number of retail investors in stock derivatives, especially index options, compared to global markets.

The study examined investor behavior from December 2024 to May 2025. It was prompted by claims that investor losses were decreasing after Sebi’s stricter rules. However, Sebi’s detailed numbers show both high participation and significant losses.

Market Trends and Participation

While index options turnover dropped by 9% in premium terms and 29% in notional terms year-on-year, volumes remain high. They are still 14% and 42% higher than two years ago.

• Premium turnover for individuals declined by 11% over the past year.
• It is still up by 36% from FY23.
• The number of unique retail traders in stock derivatives fell by 20% from last year.
• This number is 24% higher than two years ago.

These trends show a cooling off from the peak speculative boom. However, the long-term increase in participation remains significant.

Sebi’s Long-Term Analysis and New Rules

Sebi’s six-year analysis (FY20 through FY25) reveals a persistent pattern. Most retail traders consistently lose money in stock derivatives trading. This has led Sebi to keep a close watch on market behavior and flag potential risks.

Sebi stated, “We will continue to monitor trends in index options turnover. This is to ensure investor protection and market stability.”

New measures introduced on May 29, 2025, include:

• Stricter disclosure norms
• Enhanced risk indicators for derivatives products
• Steps to minimize unnecessary ban periods in single-stock derivatives trading

Sebi has repeatedly emphasized the need for better risk awareness. Without it, India’s growing retail investor base could face significant harm. The recent report reinforces this concern with clear data.