The old adage “Fools rush in where angels fear to trade” perhaps didn’t play out more tragically in India’s financial world as it has in the F&O segment. All the authorities in India’s financial world, market regulator Sebi (Securities and Exchange Board of India), banking regulator RBI (Reserve Bank of India) and Finance Minister Nirmala Sitharaman herself have cautioned individual investors against venturing into this speculative zone.
In a recent report, Sebi revealed that while more than Rs 1.8 lakh crore – it’s double the allocation of the Union budget to the health sector in FY25 – has been lost between FY22 and FY24, more than 93% of the individual investors have lost money in this slippery zone. Significantly, only four states – Maharashtra, Gujarat, Uttar Pradesh and Rajasthan – account for more than 50% of the F&O traders in the country, the report said, indicating investors from these states have borne the brunt of the losses.
Cityscape of losses
According to the report, Tier 1 cities (Mumbai, Delhi, Chennai, Kolkata, Bangalore, Hyderabad, Pune) have contributed 36.8% to the F&O turnover and 26.2% to the aggregate loss. Tier II cities have contributed to 11.4% to the turnover and 10.5% to the loss while Tier III cities have accounted for 4.3% to the turnover and 5.3% to the loss. Other cities have accounted for 47.5% to the turnover and 58% to the loss. Therefore, on the whole, investors from Tier 1 cities have made less losses from their F&O exposure compared to the investors from other cities.
Maharashtra, Gujarat, UP, Rajasthan
Maharashtra, the financial capital of India, accounted for as much as 18.8 lakh F&O traders (or 21.7%) in the last financial year. The neighbouring state of Gujarat accounted for 10.1 lakh traders (or 11.6%) and occupied the second place.
The third and fourth slots were occupied were Uttar Pradesh and Rajasthan. While Uttar Pradesh accounted for 9.3 lakh traders (10.7%), Rajasthan has 5.4 lakh traders (6.2%).
Highest loss per person
In FY24, Telangana recorded the highest loss per person at Rs 1.97 lakh. The states in the second, third and fourth positions were Andhra Pradesh (Rs 1.45 lakh), Tamil Nadu (Rs 1.37 lakh) and Karnataka (Rs 1.35 lakh). Assam and Uttarakhand recorded the lowest loss per person at Rs 1,100 in the last financial year.
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