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The introduction of hourly call auction for illiquid scrips has taken its toll on the number of scrips traded, as exchanges moved over 2,000 illiquid scrips to the new system.
On the NSE, the number of scrips traded slipped 13 per cent on Monday to 1,359 as against 1,563 scrips traded on Friday.
On the BSE, it fell 18 per cent to 2,405 (2,955).
Of the 263 illiquid securities that were introduced for trading through the periodic call auction route by the NSE, only 56 were traded on day one.
It also impacted the trading volumes, which dipped about 20 per cent.
On the NSE, turnover on Monday dropped 25 per cent to Rs 7,156.4 crore from the previous day’s figure of Rs 9,558.82 crore. Similarly, the BSE witnessed a drop of 18 per cent at Rs 1,371.75 crore (1,680.85 crore).
Welcome move
According to analysts, the call auction system affected the speculative interest in illiquid scrips.
Ramesh Chordia, a Chennai-based broker, said: “This is a welcome move, as this will reduce manipulation in the stock prices. Market will find its rhythm back once overall liquidity improves.”
The BSE and the NSE officials declined to comment on the same.
SEBI had ordered that thinly traded stocks should be traded only through hourly ‘call auctions’ system.
Mechanism
Under this system, the trading day will be split into sessions of an hour each wherein the orders can be entered in the first 45 minutes but order execution takes place only towards the end of the session.
The SEBI order defines ‘illiquid’ or ‘low’ volume stocks as those that trade less than 10,000 shares in a day or those in which less than 50 trades are executed in a session.
Exchanges have identified 2,070 stocks under illiquid category.
These scrips can exit from the call-auction mechanism to the normal trading system if they have remained in session for at least two quarters and are not illiquid. SEBI has mandated a price band of 20 per cent for illiquid scrips.
According to Jagandham Thunuguntla, Strategist & Head of Research, SMC Global Securities, the rolling out of the call auction for illiquid stocks on the BSE and the NSE was a non-event for the overall markets given the lack of participation.
> badrinarayanan.ks@thehindu.co.in
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