NSE questions low investor base claim

The National Stock Exchange (NSE) seems to be miffed by recent reports suggesting that India has a low equity base and only a few traders account for the bulk of the volume.

The exchange has sent letters to the Securities and Exchange Board of India (Sebi), the Reserve Bank of India (RBI) and the finance ministry, saying the share of top brokerages in India is much less than in the US and that retail participation has gone up compared to the earlier years.

The letter, written by NSE MD and CEO Ravi Narain, says, “Some misleading news reports/articles have selectively quoted data... to try and denigrate the growth and development of capital markets in India”.

According to NSE’s letter, about 12 million people invest through NSE, that has set up more than 2,00,000 trading terminals. It also highlights the fact that a large number of retail investors participate in the market through mutual fund and insurance schemes.

NSE’s letter comes in the backdrop of reports indicating that nearly 67 per cent of transactions on NSE’s derivative segment are intra-day, while 68 per cent of transactions in the cash segment are generated by those who do not take delivery of shares. Data also showed that 90 per cent trading came from just 1,92,000 investors.

NSE, however, says the top 10 brokerages on the exchange contribute about 24 per cent of the total trading turnover, whereas the same on the New York Stock Exchange is 38 per cent. It is 66 per cent on both the Bursa Malaysia and the Johannesburg stock exchange. “This shows that participation in Indian markets is far more widespread than in some of the mature as well as developing markets,” says the letter.