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

Thanks to the relentless rally in the equity market and improved retail participation, the average daily turnover (ADT) in the cash segment on stock exchanges has jumped substantially in the June quarter.

The ADT on the cash segment in NSE was up 18 per cent at ₹58,042 crore in the June quarter against ₹49,277 crore logged in the March quarter.

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

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The average ADT in equity derivatives on NSE rallied 27 per cent inthe June quarter to ₹2.74 lakh crore against ₹2.15 lakh crore logged in the March quarter.

In BSE, ADT in derivatives trading zoomed more than three times to ₹33,663 crore against ₹7,336 crore registered in the March quarter.

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

Retail investors have renewed their interest in equity markets ever since the benchmark indices Sensex and Nifty exhibited exuberance by hitting new higts continuously in the last two months, backed by steady inflows from foreign institutional investors.

Shridatta Bhandwaldar, Head Equities and Fund Manager, said structurally Indian economy is on a strong wicket and the outlook remains very positive for the next 3-5 years.

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Indian banks are better placed to lend as t bad loans are at a record low, and corporates with a highly deleveraged balance sheet are all set to roll out their capex plan, which will help economic growth sustain in coming years, he added.

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

VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services said new investors were attracted to the market for wealth creation after the sharp 15 per cent rise in the Nifty from the March lows.

However, he said the negative dimension to this retail exuberance is that most of these new investors normally chase low-grade small-cap stocks, which slowly run into bubble territory, he said.