An indication of the growing volumes in the debt segment is that the turnover in the WDM segment was 76.2 per cent of the Rs 10,85,152 crore combined turnover in the equity markets of the BSE and NSE.
The turnover in the WDM segment zoomed to around Rs 8,26,289 crore in the calendar year so far, which is almost equal to the aggregate turnover in the segment in all of the last seven years.
The participation of new private sector banks as well as foreign banks in the segment appears to be the main driving force behind the growth in volumes. A fluid interest rate situation has prompted these banks to churn their portfolios much more aggressively.
Banks, which are looking for different avenues to generate income, prefer to trade in the WDM. The banking sector accounts for 49.79 per cent of the traded volume in the segment at Rs 4,11,369 crore.
According to NSE data, domestic banks have a 36.58 per cent (Rs 3,02,223 crore) share in the total volumes, while foreign banks have a 13.21 per cent (Rs 1,09,145 crore) share.
Primary dealers and trading members account for 46.13 per cent of the traded volume, at Rs 3,81,130 crore. Primary dealers cornered 23.29 per cent of the volumes at Rs 1,92,474 crore, while trading members generated volumes worth Rs 1,88,656 crore, a 22.83 per cent share.
Indeed, turnover on the NSE's WDM segment is higher than on the equity segment , in the current year so far. The turnover on NSE's equity market during calendar year 2001 touched Rs 6,81,708 crore, 82.5 per cent of the turnover in the WDM segment.
The trading pattern in the WDM and equity markets has one thing in common. The top 10 securities account for around 60 per cent of the total turnover in the WDM segment.
In the equity market, the top 10 traded stocks account for a little over 65 per cent of the total turnover.
Trading in government securities is most popular among traders; 58.33 per cent (Rs 5,70,068 crore) of the turnover is concentrated in government securities.
Among government securities, the 11.40 per cent, 2008 paper was the most traded paper, cornering 9.43 per cent (Rs 92,122 crore) of the total WDM turnover. The 11.03 per cent, 2012 paper aggregated volumes of Rs 89,474 crore, 9.16 per cent of the total WDM turnover. The 11.50 per cent, 2011 paper aggregated a total turnover of Rs 83,943 crore, accounting for 8.59 per cent of the total.
But debt market analysts don't see the surge in volumes as a signal of the debt market deepening. Kaushik Modak, head, fixed income securities, Kotak Mahindra Capital Company, said: "Liqudity in the banking system is driving the volumes in the wholesale debt market. The wholesale debt market is dominated by government securities. Banks which are saddled with excess deposits have no way but to invest in government securites."
Sanjit Singh, fixed income analyst at ICICI Securites Finance, said: "The government securities market has remained bullish throughout the fiscal except for a short interval. The expectaion that gilt prices will go up and the yields will fall is always there. This has caused the volume to surge in the WDM."
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