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There were fears this year that the Securities and Exchange Board of India’s rules on traders depositing upfront margins for intra-day trades would depress volumes. But numbers show that both the cash and derivative segments witnessed very high turnover in November and December, despite SEBI’s rules. In fact exchange turnover hit record levels this year.
There were lots of factors helping exchange volumes, says Deepak Jasani, Head of retail research, HDFC Securities. “As far as institutional flows go, the strength in the rally, flows towards emerging markets generally, cross-deals between FPIs and the re-balancing turnover caused by rejig in the weightage for Indian stocks in global indices helped boost volumes. On the non-institutional side, low transaction charges, lot of time on hand and no hinderance in the form of some sites being barred on office PC have helped in increasing volumes.”
Surge in cash segment
An analysis of the turnover in the cash segment of the NSE shows that average daily turnover in 2020-21 was 60 per cent higher at ₹58,302 crore compared to ₹36,432 crore in FY20. This is the sharpest jump in recent years. Surprisingly, the average trade size also rose 14 per cent in FY21, implying that larger sums were spent per trade.
The regulator’s move to ask for upfront margin for all trades in the cash segment from September 2020 did depress the turnover in September and October, but volumes once again went up in November, with a new record being set.
Equity derivatives’ numbers
In a similar vein, the turnover in equity derivatives also surged sharply in 2020. The average daily traded turnover in FY21 is ₹20,36,140 crore, 45.6 per cent higher compared to the average daily volume of ₹13,98,345 crore in FY20. However, it needs to be noted that this is a notional turnover, based on the value of option contracts. If only the premium turnover is factored in, the value will shrink considerably.
The extent of traders’ enthusiasm can be gauged from the fact that the turnover in index options and stock options recorded between April and December 2020 has already surpassed the full-year turnover in FY20. The overall F&O turnover in FY21 is already 7 per cent higher than the total turnover in the 12 months of FY20.
“If people start going to office, that portion of volume will fall, thinks Jasani. “If the trend in market becomes sluggish or if FPIs pull money at higher levels, there can be impact on volumes in some quarters. Overall number of participants have increased and equity allocations have also risen; so the trajectory of volumes is higher and hence could be headed higher barring a few months or quarters.”
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