Market turnover dips 26.2% as heavy rain continues to lash Mumbai

As heavy rain continued to lash Mumbai on Tuesday, the total value of traded securities on national stock exchanges was down by over a quarter. Turnover on the BSE and the National Stock Exchange, the two major bourses, came in at Rs 9.95 trillion on Tuesday. 

The average turnover during June was Rs13.48 trillion. Tuesday’s turnover was lower by 26.2 per cent. 

On Monday, 375 mm rainfall was recorded — reportedly the highest in at least 14 years.  The turnover was Rs 6.18 trillion, down by over 54.1 per cent. 

The drop is similar even if one excludes expiry week. The last week of the month sees higher turnover because of the expiry of monthly derivative contracts as traders take fresh positions by buying new contracts. 

Similar instances were seen in previous years. The highest rainfall for June in 2018 saw a 15.4 per cent decline in turnover compared to the previous five sessions. 

Some of this may be attributed to the fact that Mumbai accounts for a significant share of the national turnover. The Securities and Exchange Board of India’s 2017-18 annual report noted the concentration. 

“Trading data for the top-20 cities in India shows that 58.6 per cent of the BSE’s total turnover in the equity cash segment and 62.1 per cent of the NSE’s total turnover in the equity-cash segment was concentrated in Mumbai (including Thane), the financial hub of the country,” it said. 

Updated figures for 2018-19 show Mumbai’s share on the BSE is at 56.4 per cent. It is 64.3 per cent on the NSE. 

Alok C Churiwala, managing director at Churiwala Securities said concentration looks likely to go down in the days ahead. 

“It used to be that the western region accounted for the majority of volumes because of places such as Mumbai, Ahmedabad, Surat and Rajkot. But volumes are now spreading more evenly across the country,” he said.  On Tuesday, some roads in Mumbai were waterlogged. 

Trains were cancelled as were flights. 

Another reason for the slow-down in turnover could also be the budget, according to Churiwala. The Union Budget is set to be unveiled on July 5th.  People may prefer to not take major positions ahead of the event, according to him. 

Other cities which contribute to turnover include New Delhi, Bengaluru, Kolkata, and Ahmedabad. All of them have a single-digit share. It ranges from between 1 and 7 per cent in the cash market, shows the latest Sebi bulletin data.