The Hindu Business Line : Trading volumes down by 36% since Jan

Mumbai, Feb. 28 At this plush suburban broking firm the dealers weren’t swaying to the gyrations of the Sensex, but rather to the title track of Biwi No.1! “What else can we do now, there is hardly any trading taking place these days,” said a dealer when asked about how the Bollywood flick seemed to have replaced a business channel.

If the NSE data on trading volumes is anything to go by, investors seem to be staying away from the markets, bringing down trading volumes by almost half from a month back.

As per data available on the NSE, the total traded quantity of 1,06,769 lakh shares in February marks a decline of 36 per cent compared to 1,66,821 lakh shares traded in January.

“Volumes across all scrips have been affected as investors prefer to stay away from the markets as of now. The investors seem to be rather sceptical of the markets due to the high volatility,” said Mr Prashant Bhansali, Director, Mehta Equities Ltd.

Things have definitely become a lot quieter in the dealing rooms of most broking houses. Dealers joke about the fact that now they have more time on their hands to catch up on reading the newspapers or watch the ongoing India Australia tour!

Pressure down

“The atmosphere in the dealing room has become more relaxed. With no pressure of trading large volumes daily, we have more time to do “time pass”! Our office is also being lenient with us when it comes to taking the day off as there are hardly any volumes these days,” said a dealer with a brokerage in town.

Though the dealers may be taking advantage of the low volumes, their bosses have a whole lot on their minds. “There are clients who haven’t paid up and some of the cheques that the clients have submitted have bounced. Now we have the added burden of running after these clients to make them pay up. Though our broking business may be taking a break, our legal department will have to work overtime at least for the next year and a half,” said a sub-broker with a brokerage.

He also added that while till about last year his broking house used to see at least around 50,000 to 60,000 shares traded a day, now there are hardly 10,000 trades a day due to which their revenues have taken a beating too.

The smaller firms

With the markets expected to go down further, it would affect the smaller players in the industry more than the big broking houses, say market men.

“With revenues of all broking houses decreasing, the smaller firms would get affected the most as they would not be able to stand up to the competition by bigger players. And also in the long run if conditions do not improve you could see some of them even going out of business,” said Mr R. Balagopal, Senior Vice-President, Fedex Securities Ltd.

Mr Kaushal Sampat, Chief Operating Officer, Dun & Bradstreet Information Services Pvt Ltd, said that the bigger firms have the advantage of providing a more diversified range of products unlike the smaller firms.

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