π‘ Introduction: What Is Intraday Trading?
Intraday trading means buying and selling shares on the same day. This is different from regular investing where you hold shares for months or years. Intraday traders aim to make profits from small price changes within a single day.
For example:
- You buy Tata Motors at βΉ600 in the morning.
- Sell it at βΉ612 in the afternoon.
- Profit = βΉ12 per share (minus charges).
Earlier, only stocks were used in intraday trading. But now, many traders are also using ETFs (Exchange-Traded Funds). Letβs understand both and how they compare.
Table of Contents
π§ What is a Stock?
A stock (also called share or equity) means ownership in a company. If you buy shares of Infosys or Reliance, you become a small owner of that company.
In intraday, you donβt worry about ownershipβyou just try to buy low and sell high on the same day to make profit.
π What is an ETF?
An ETF (Exchange-Traded Fund) is a basket of many stocks. For example, a Nifty 50 ETF has all 50 companies from the Nifty index.
So when you buy 1 unit of that ETF:
- You are investing in all those 50 companies together.
- But just like a stock, it trades on the stock exchange in real-time.
- You can buy/sell ETFs multiple times during the dayβjust like any share.
π Key Differences Between Stocks and ETFs in Intraday
Letβs now go point-by-point to compare both:
1. π¦ Liquidity
Liquidity means how easily you can buy and sell without affecting the price.
- Stocks: Big companies like Reliance, HDFC Bank, TCS, etc., have lakhs of buyers/sellers daily. Very easy to trade.
- ETFs: Now improving in India. SBI Nifty ETF, Nippon ETF, ICICI Nifty Next 50βall have decent volumes, but not as much as stocks.
Verdict: Stocks are more liquid. ETFs are improving but still behind.
2. β οΈ Volatility (Price Movement)
Volatility means how much the price moves.
- Stocks can move 5β10% in a day. Great for profitβbut risky.
- ETFs move slowlyβmostly 1β2%βsince they represent the whole market.
Verdict: Stocks give bigger opportunities and bigger risks. ETFs are safer.
3. π° Costs & Brokerage
When you trade, you pay:
- Brokerage fee
- STT (Securities Transaction Tax)
- GST, Stamp Duty, SEBI Charges
Hereβs the difference:
Type | STT (Buy) | STT (Sell) | Stamp Duty | Brokerage |
---|---|---|---|---|
Stocks | 0.025% | 0.025% | Yes | As per broker |
Equity ETFs | 0% | 0.001% | Mostly No | As per broker |
So, with ETFs:
- Less tax
- Less stamp duty
- Lower overall cost
Verdict: ETFs are cheaper to trade.
4. π§ Trading Strategies
- Stocks: You can do breakout trading, news-based trades, earnings plays, intraday shorting, and more.
- ETFs: You follow index trends like Nifty rising/falling. Limited strategy but lower risk.
Verdict: Stocks give more freedom and flexibility.
5. π Price Gaps and Circuit Limits
- Stocks can hit circuit limits (+/-5% or 10%) in one day. Trading stops.
- ETFs rarely hit circuits since they follow index movement.
Verdict: ETFs are more stable. Stocks can be unpredictable.
6. ποΈ Transparency & Regulation
- ETFs are more transparent: You can see daily NAV (net asset value), total holdings, tracking error, and live price.
- Stocks depend on company reports, which come quarterly.
Verdict: ETFs give more daily information. Stocks give company-level info.
7. πΈ Taxation
After the 2024 tax update:
- Both stocks and ETFs follow capital gains tax rules.
- But ETFs are simpler and more tax-efficient.
Short-Term Capital Gains (STCG):
- If sold in less than 1 year β 15% tax on profit
Long-Term Capital Gains (LTCG):
- If held for more than 1 year β 10% tax after βΉ1 lakh exemption (may vary slightly by ETF type)
Verdict: For intraday (same-day), both treated as STCG. But ETFs may have fewer charges.
8. π₯ Who Uses Them?
- Stocks: Used by retail traders and professionals for fast trades.
- ETFs: Big institutions like mutual funds, banks, hedge funds use them to hedge risk or follow index.
Verdict: ETFs are professional-grade tools. Stocks are more common for individuals.
β Pros and Cons (Table Summary)
Factor | Stocks | ETFs |
---|---|---|
Liquidity | Very High (Top 100 stocks) | Moderate to Good (SBI, Nippon, ICICI) |
Volatility | High β good for fast profits | Low β better for safe trades |
Cost | Higher (STT, stamp duty) | Lower cost, low tax |
Strategy Variety | Many options (news, earnings) | Limited (trend-following only) |
Transparency | Less (reports every quarter) | High (daily NAV, live holdings) |
Stability | Prone to price jumps and circuits | Stable and index-based |
Learning Curve | More analysis needed | Easier for beginners |
π Example: Stock Intraday vs ETF Intraday
Letβs say Nifty is up 0.5% today.
You do 2 trades:
1. Stock Intraday:
- Buy ICICI Bank at βΉ980
- Sell at βΉ998
- Profit = βΉ18 per share
2. ETF Intraday:
- Buy SBI Nifty ETF at βΉ200
- Sell at βΉ203
- Profit = βΉ3 per unit
Stock gives more per shareβbut also bigger risk if it falls.
π§ When Should You Choose Stocks?
Choose stocks if:
- You have experience reading charts
- You follow company news and earnings
- You are ok with high risk and fast movement
- You want flexible trade setups
π§ When Should You Choose ETFs?
Choose ETFs if:
- You are a beginner and want low risk
- You want simple trading with Nifty or Sensex trends
- You want to avoid big losses or shocks
- You prefer clean, low-cost trades
π Tools for Intraday Analysis
Use these platforms:
Platform | What It Does |
---|---|
TradingView | Charting + indicators |
Chartink | Screeners for intraday setups |
Kite (Zerodha) | Broker + trading view + watchlists |
5paisa | Trade + tips + research |
Moneycontrol | News + technical data |
π Popular ETFs in India (for Intraday)
ETF Name | Follows | Volume Level |
---|---|---|
SBI Nifty 50 ETF | Nifty 50 Index | Very High |
Nippon India Nifty BeES | Nifty 50 | High |
ICICI Nifty Next 50 ETF | Nifty Next 50 | Medium |
Motilal Oswal Nasdaq ETF | Nasdaq 100 (US) | Low (but growing) |
Bharat Bond ETF | PSU Bonds (Debt) | Low for intraday |
Stick to high-volume ETFs for same-day trading.
π Final Tips
- Start with paper trading (virtual money) to learn
- Use stop-loss to manage risk in both stocks and ETFs
- Keep your position size small in the beginning
- Avoid trading during news hours (volatility is high)
- Focus on 2β3 stocks or 1 ETF each day to build confidence
π Conclusion
Both ETFs and Stocks have their own benefits in intraday trading. The best option depends on your goals, skills, and risk tolerance.
If you want:
- Fast profit and action β Go for large-cap stocks
- Safety, structure, low cost β Try ETFs
You can even combine both in your intraday portfolio. For example:
- Use ETF trades to follow market trend
- Use stock trades for earning news or breakouts
With time, experience, and discipline, both methods can help you build consistent profits.