Proprietary traders recorded ₹44,483 crore in gross derivatives trading profits in FY26, down just 3 per cent, while FPI and mutual fund profits fell sharply. Individual traders remained the only major category with aggregate losses, losing ₹72,243 crore before transaction costs.
The cooling down in India’s equity derivatives market in FY26 was not just reflected in the fall in retail participation or losses, but also showed up on the profitable side of the trade, where proprietary trading desks largely held on to their gains while foreign portfolio investors (FPIs), mutual funds and corporates saw their profits fall.
Proprietary traders recorded gross trading profits of ₹44,483 crore in FY26, down just 3 per cent from ₹45,955 crore a year earlier, according to the Securities and Exchange Board of India’s (SEBI) latest study. FPIs, by comparison, saw their profits plunge 55 per cent to ₹13,896 crore from ₹31,085 crore in FY25. Corporate profits fell 22 per cent to ₹8,092 crore, mutual fund profits dropped 54 per cent to ₹2,595 crore, and those of partnership firms and LLPs fell 38 per cent to ₹2,953 crore.
No lesson learnt
Still, individual traders remained the only major category to record an aggregate loss. Their gross trading loss fell 26 per cent to ₹72,243 crore in FY26 from ₹97,882 crore in FY25, while their net loss after transaction costs stood at ₹91,685 crore, down 18 per cent from the revised ₹1.12 lakh crore in FY25.
Over FY25 and FY26 combined, individual traders incurred gross losses of ₹1,70,125 crore. Proprietary traders earned ₹90,437 crore over the two years, followed by FPIs at ₹44,980 crore, corporates at ₹14,242 crore, mutual funds at ₹8,208 crore and partnership firms and LLPs at ₹7,690 crore. SEBI said that derivatives trading is “largely a zero-sum activity before transaction costs”, with individual losses broadly matched by the profits of corporate and institutional participants.
Who gains the most
The profitable side, however, is not evenly distributed, as the top 10 proprietary entities accounted for ₹33,124 crore, or 74.5 per cent, of the category’s ₹44,483 crore gross profit in FY26. Among FPIs, the top 10 accounted for ₹6,852 crore, or 49.3 per cent, of the category’s ₹13,896 crore profit.
Of 432 FPIs, 372 traded through algorithms in FY26, while 323 of 693 proprietary traders did so. SEBI found that “99 percent of the gross profit of FPIs and PROP traders came from algo entities”. The number of FPI algo entities rose 22 per cent from 306 in FY24 to 372 in FY26, while proprietary algo entities increased 16 per cent to 323.
Proprietary traders made ₹43,420 crore of their ₹44,483 crore gross profit from options, while FPIs made ₹10,740 crore. For individuals, options accounted for ₹66,080 crore of their ₹72,243 crore gross loss.
At the individual level, even the people who made money did better in FY26. Average profit among profit-makers rose 22 per cent to ₹1.22 lakh from ₹1 lakh, while the average loss increased 11 per cent to ₹1.47 lakh from ₹1.32 lakh. Yet losses remained 21 per cent higher than profits per person. “Average losses were higher than average profits in every year during FY22-FY26,” SEBI said.
Transactions cost hurts
Transaction costs also continued to weigh more heavily on those who lost: they amounted to 35 per cent of gross losses among loss-makers, compared with 21 per cent of gross profits among profit-makers.
Data shows that while the retail loss pool has narrowed, the profitable side remains concentrated among a relatively small group of professional participants, with algorithmic trading playing a dominant role.
Published on August 21, 2026
Source link
