SEBI Study Reveals Small Traders Lost Rs. 91,000 Crore

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A study conducted by SEBI indicates that small investors experienced cumulative losses of ₹91,685 Crore in the F&O segment during the fiscal year 2025-26, with 88% of retail traders recording net losses.

Key Findings of the Study

The findings reveal systemic risks faced by individual participants in India’s capital markets, particularly those engaging in derivative trading. The analysis highlights that retail traders lost an average of ₹1.17 Lakh per transaction, underscoring the fragility of inexperienced investors in highly leveraged financial instruments.

Average Loss Per Transaction

The research emphasizes that derivative contracts accounted for 92% of total losses incurred by retail investors across all trading categories. Over 88% of participants in the F&O market reported negative returns over the 12-month period.

Portfolio and Capital Distribution

Data shows that 78% of these traders held equity portfolios valued below ₹1 Lakh, while 35% had no underlying shares. Low-capital traders absorbed 70% of the segment’s total losses, exacerbated by the volatility of leveraged positions and additional costs such as brokerage fees, taxes, and exchange charges.

Regulatory Measures and Market Trends

Regulatory measures aimed at mitigating risks, including stricter margin requirements and restrictions on index contracts, led to a 20% decline in active retail F&O traders, reducing the total to 7.86 million in FY26. First-time entrants fell by 40% compared to the previous year.

Trading Behavior of Remaining Traders

Despite this, analysts note that remaining traders continue high-frequency trading and aggressive strategies, accelerating capital depletion.

Cyber Threats and Investor Advice

The report also addresses rising cyber threats targeting retail investors through social media. Cybercrime expert Professor Triveni Singh warned that unauthorized messaging groups and fraudulent investment communities exploit the demand for quick returns, often directing users to unregulated platforms.

Regulators advise investors to verify credentials and avoid unsolicited advice, emphasizing that sustainable wealth growth requires disciplined risk management rather than speculative trading.