How India turned into a trading nation
yaar," she replied. “Oh, get up and smell the coffee." Mairaa took a few seconds to register the smell of freshly brewed coffee and then woke up: “That’s nice," she said, taking a sip. “And why are you glued to your phone at 7am?" “I was reading this very interesting piece on livemint.com," said Vivaan, an engineer working with a software company.
“What does it say?" asked Mairaa, an economist by training and on a break to complete her PhD. “It’s a sort of a mea culpa of a 32-year old." “Mea culpa? Engineer sahab is speaking Latin early in the morning." “Well," said Vivaan, ignoring his wife’s jibe. “This guy says that over the last eight to nine years he has lost ₹60 lakh by trading in financial derivatives." “Oh.
As time goes by, more such stories will come out," said Mairaa. “Really?" “Yes. In fact, as a recent consultation paper released by the Securities and Exchange Board of India (Sebi) pointed out, in 2023-24, 9.25 million unique individuals and proprietorship firms traded in the index derivatives segment of the National Stock Exchange (NSE) and cumulatively incurred a trading loss of ₹51,689 crore.
Index derivatives are a kind of financial derivative." “That’s a lot of money." “Yes. And of these 9.25 million unique investors, 7.83 million investors, approximately 85 out of 100, lost money." “Ouch." “And once trading costs are taken into account, 90 out of 100 lost money trading financial derivatives." “So, trading in financial derivatives is clearly a recipe for financial disaster for most." concluded Vivaan. “True.
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