“Stock market is meant for long-term wealth creation. An unpleasant experience disheartens the affected investors to enter the stock market ever again. Trade in derivatives by retail investors should be avoided because of the high risk involved in derivatives. Be a long-term player. This is the best way to participate in India’s growth story,” Chauhan said in a message to market participants on Diwali Muhurat trading day.
Stating that the stock market is meant for long-term wealth creation, he said an unpleasant experience disheartens the affected investors to enter the market ever again.
To celebrate the Diwali festival, BSE and NSE are holding a special Muhurat trading session today from 6:15 pm to 7:15 pm.
“In the heart of this vibrant marketplace, as the Diwali lights shimmer, we embark on a journey of careful choices and strategic investments. Each trade made during this auspicious time promises growth and the spirit of unity among investors,” he said.
Earlier in the year, a study by markets regulator Sebi showed that every 9 in 10 individual traders in the equity F&O segment suffered losses in FY 2021-22. It was found that 9 out of 10 individual traders in the equity F&O segment incurred losses, with an average loss of Rs 1.1 lakh during FY22. Moreover, 90% of the active traders incurred average losses of Rs 1.25 lakh during the same period.
Despite the losses, derivative volumes are now 400x that of cash equity and 900x of delivery-based trading volumes, the highest ratio in the world.In the US, derivatives account for 70% of traded volumes, compared to 99.6% currently for the Indian markets. A key reason for attractiveness of the product is the embedded leverage, where only a fraction of the notional value is needed to transact that ends up magnifying the potential gains (as well as losses) for the participant, according to another recent report from Axis Mutual Fund.
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