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| Cash mkt turnover at 15-mth high | | Apart from FII inflow spurring rally, many retail and HNI participants active in segment |
| Deepak Korgaonkar / Mumbai Feb 11, 2012, 00:57 IST |
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The markets have been on a roll in calendar 2012, with the Sensex surging 14.8 per cent in this year so far. The rally has also fuelled turnover in the equity cash market; it has touched a 15-month high.
The combined average daily turnover in the cash segments, as measured by the traded value on the two exchanges — National Stock Exchange and Bombay Stock Exchange — has touched Rs 19,019 crore. This is the highest combined daily average turnover in the cash segments since November 2010, when it was Rs 22,354 crore, according to data compiled by the Business Standard Research Bureau.
The average daily cash turnover in the current month is 76 per cent higher than the Rs 10,832 crore in the month of December 2011, when the equity indices hit a 28-month low due to global uncertainties, rising interest cost and inflation concerns.
A sharp rally in equity markets after the significant inflow of foreign institutional investors’ money, post the release of funds by the European Central Bank, have led the spurt in trading volumes, analysts say. Strengthening of the rupee against the dollar and easing concerns over inflation led to foreign investors stepping up stock purchases in the past couple of months, they add.
Fund flows
Foreign investors had mostly stayed away from Indian equities in 2011. They’ve made a net investment worth Rs 18,451 crore ($3.68 billion) in Indian stocks since January 1, Securities and Exchange Board of India (Sebi) data shows.
“Retail interest has become high as the market has rallied 20 per cent from December lows, when the Nifty made a bottom of 4,531. Beaten-down stocks have rallied 40 per cent. A few stocks in the realty pack, ADA Group stocks and select infrastructure counters have rallied more than 70 per cent, which has lured investors and traders back to the market,” said A K Prabhakar, senior vice president, equity research, at Anand Rathi Financial Services.
Derivatives
Meanwhile, the combined average daily traded value in the lower-yielding derivatives segment has declined six per cent. The market share of the cash segment on overall turnover has increased to 14 per cent in the current month from seven per cent recorded two months earlier, while the derivatives segment, which earlier accounted for 93 per cent of the total turnover, now accounts for 86 per cent.
States Siddarth Bhamre, equity derivatives head with Angel Broking, “A lot of retail and high net worth (HNI) participants are short in the market. They are funding their mark-to-market losses in these short positions by selling equity portfolios. Having missed the rally in index and large-cap stocks, they are now flocking towards mid-cap stocks that have not run up till now.”
He added: “In case the markets correct, the retail segment and HNIs will feel the margin pressure in the derivative segment. Hence, they prefer to play the cash market segment in the current scenario.”
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