Cash Equity vs Futures in 2026: Why Intraday Costs Now Favour Flexible Cash Strategies

At Retail Algo Trader, we are increasingly interested in intraday cash equity for two practical reasons: flexible position sizing and lower current transaction costs. We can build strategies around modest capital, increase share quantities gradually, and spread risk across different systems. But a fair comparison must include what futures still do well—and distinguish low brokerage from low total trading costs.

This article compares non-delivery intraday equity trades with equity futures. Delivery investing, options and commodity contracts have different charges.

What changed—and is our observation correct?

Yes, with an important qualification. From 1 April 2026, securities transaction tax (STT) on equity futures increased from 0.02% to 0.05% on the sell side. Intraday non-delivery equity STT remains 0.025% on the sell side. Futures STT is therefore twice cash intraday STT for an equal sale value. The futures increase itself was 150%. Source: NSE’s current STT schedule.

CTT is commodity transaction tax; it does not apply to these equity trades. For this comparison, the relevant tax change is STT. And STT is charged on the sale value, not on the profit or the margin deposited. A losing trade still incurs transaction charges.

When futures had the tax advantage

Our recollection of an earlier futures advantage is justified. Futures STT used to be substantially below cash intraday STT. Here is the historical comparison of STT alone; these figures are not historical all-in trading costs.

The 2023 change appears in NSE’s April 2023 circular. The October 2024 revision appears in the Union Budget 2024–25 memorandum. The latest rates are in NSE’s current schedule.

Futures also have lower exchange-related charges and a lower stamp-duty rate in our present NSE comparison. That advantage still exists. What changed is that the larger futures STT now outweighs those savings when exposure and brokerage are held equal.

The current charges: a transparent comparison

We use a ₹1,00,000 purchase followed by a ₹1,00,000 sale, with unchanged prices and ₹2,00,000 total turnover. Brokerage is assumed to be zero per order in this comparison. This compares equal exposure, not equal margin money.

The ₹1 lakh figure is a convenient calculation unit. It is not a claim that a futures contract can be traded for that notional value. Futures require whole contract lots; actual charges depend on the value of the valid lots traded.

Figures rounded to two decimals; actual contract-note rounding can differ. Rate references: Zerodha’s published charges and NSE circular FA73061. Our comparison assumes zero per-order brokerage; any fixed subscription charge is assessed separately.

The exchange/IPFT figures are combined rates, so we have not added IPFT a second time. NSE changed the allocation between those two components from 1 March 2026 while leaving their combined amounts unchanged.

On this zero-brokerage example, cash saves approximately ₹21.07 per round trip, or about 37% of the illustrated futures charges. With ₹10 lakh on each side, the corresponding totals are approximately ₹354.81 and ₹565.55. These are calculations from the stated rates, not promised returns.

These totals exclude spreads, slippage, market impact, subscriptions/API fees, financing, penalties, broker auto-square-off charges and income tax. BSE charges can differ. A fully squared-off cash intraday trade normally does not incur a delivery DP debit charge; an unintended delivery changes the picture.

Zero brokerage helps—but every trade still has a cost

Our studies focus on zero-brokerage intraday accounts or fixed subscription brokerage plans, including fixed-fee arrangements such as Harmony. The table isolates transaction-level costs with zero per-order brokerage. For a fixed plan, assess the applicable subscription fee separately over the study period; it is not included in these per-trade totals.

Our approach is to evaluate opportunities without per-order brokerage, while still controlling total turnover and execution costs.

Even ten equal ₹1 lakh round trips in the cash example accumulate about ₹354.81 of explicit charges before spread and slippage. More trades are useful only when their expected edge survives all those costs. A strategy that looks attractive before costs can become unprofitable through excessive turnover.

Why cash equity deserves consideration now

1. Position sizing can start small

In the regular cash market, we can generally size positions in individual shares. Futures require fixed lots, which can make the smallest available position too large for a modest risk budget. Smaller increments help us test live execution, limit early exposure and scale gradually.

Can a strategy start with ₹1,000? Sometimes, yes—where the share price, permitted intraday margin and costs allow it. But ₹1,000 will not support every stock or a broadly diversified set of simultaneous positions. SME securities can also have lot requirements. Available capital must cover both trading requirements and a sensible loss buffer. Scaling also has practical limits: as order sizes grow, liquidity and market impact can change a strategy’s results.

2. Multiple systems become easier to size

Cash equity can suit portfolios of small systematic strategies across different eligible stocks. We can assign capital and share quantities according to each system’s risk, rather than repeatedly rounding exposure to a futures lot.

However, ten strategies taking similar long positions at the same time may behave like one concentrated bet. We assess correlation, overlapping positions, sector exposure and aggregate drawdown. We also account for how positions from different systems may net within one account.

3. A wider stock universe and simpler intraday mechanics

Cash offers access to stocks beyond the derivatives universe, subject to the broker’s intraday eligibility rules and adequate liquidity. A strictly intraday cash system also avoids futures basis, expiry selection and rollover decisions. Those are useful operational advantages, although cash still requires disciplined order handling and reliable end-of-day exits.

What futures still do better

Direct index exposure is a major advantage. Nifty or Bank Nifty futures can express an index view or hedge a portfolio in one contract. A cash stock strategy is not automatically a substitute for an index strategy, and maintaining a stock basket adds complexity.

Liquid futures contracts may offer excellent depth and tight spreads for larger orders. Better execution can outweigh a higher tax bill. This must be measured for the particular contract and trading time; futures liquidity is not uniformly superior across all stocks and expiries.

Futures also support long and short positions carried beyond the trading day, subject to margin and risk controls. Certain recognised hedges can reduce required margin. But margin is a deposit against exposure, not a limit on possible losses; daily mark-to-market losses and margin increases can create funding pressure.

Cash intraday leverage is also conditional. For example, Zerodha describes up to five-times intraday leverage on eligible equities. We should use the current margin calculator, not assume that every cash stock gets that leverage or that futures receive an extra intraday concession.

Advantages and disadvantages at a glance

Our preference: flexibility first, evidence always

For strategies built around modest starting capital, individual stocks and carefully sized exposures, cash equity has become a compelling place to research intraday systems. Its current explicit cost advantage strengthens a case that already existed through flexible share quantities.

We would still choose futures when direct index exposure, hedging, contract liquidity or the system’s design makes them the better instrument. We compare actual fills and net results at equal exposure and risk—not returns on a small margin deposit against returns on a fully funded cash position.

Educational note: Retail Algo Trader is not a SEBI-registered research analyst. This article explains transaction costs and trading mechanics; it is not a recommendation to trade a security or strategy. Rates were checked on 11 October 2026 and may change. Check the current exchange schedule and your broker’s contract note before deploying capital. Past performance does not guarantee future returns.