Equity market rally and retail participation drive surge in cash segment turnover

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Thanks to the continued rally in the stock market and improving retail participation, average daily turnover (ADT) in the cash segment of the stock markets rose significantly in the June quarter.

ADT in the cash segment of NSE increased by 18 per cent at ₹58,042 crore in the June quarter as against ₹49,277 crore reported in the March quarter.

Similarly, cash ADT on BSE increased by 14 per cent to Rs 11,900 crore in the June quarter as against Rs 10,465 crore recorded in the March quarter, according to data obtained from Geojit Financial Services.

Average ADT in equity derivatives at NSE increased by 27 per cent in the June quarter to ₹2.74 crore as against ₹2.15 crore recorded in the March quarter.

At BSE, ADT in derivatives trading was more than tripled to ₹33,663 crores as against ₹7,336 crores recorded in the March quarter.

To boost its derivatives volume, the country’s oldest exchange, BSE, in May relaunched futures and options contracts on Sensex and Bankex with reduced lot sizes and different expiration dates.

Retail investors have renewed their interest in stock markets since the benchmark Sensex and Nifty indexes showed enthusiasm by continuously making new highs in the past two months, buoyed by steady inflows from foreign institutional investors.

Shridata Bhandwaldar, Head of Equities and Fund Manager, said that structurally the Indian economy is in a strong position and the outlook remains very positive for the next 3-5 years.

Indian banks are in a better position to lend as t Bad loans are at a record lowAnd companies with a low-indebted balance sheet are all ready to roll out their capital expenditure plan, which will help sustain economic growth in the coming years, he added.

Buoyed by a bullish secondary market and a sudden surge in primary market issuance, investors opened 2.36 million new Demi accounts with the Central Depository Service and the National Securities Depository. This pushed total active demat accounts to a 13-month high of 120.50 million in June.

VK Vijayakumar, chief investment strategist at Geojit Financial Services, said new investors were drawn into the market for wealth creation after the sharp 15 percent rise in Nifty from its March lows.

However, he said a downside to this retail exuberance is that most of these new investors typically chase low-grade, small-cap stocks, which are slowly hitting bubble territory.