Trade volumes down at Ludhiana Stock Exchange

The uncertainty in the stock market has affected the volume of business at the Ludhiana Stock Exchange (LSE), which caters to the investors of Punjab, Himachal Pradesh, Chandigarh and Jammu & Kashmir.

“The trading volume has been severely hit by the turmoil in the stock market. Earlier, the LSE Securities Ltd, a subsidiary of LSE, did a daily turnover of Rs 500-700 crore a day till March 2008. But now it has been reduced to Rs 150 crore a day due to uncertainty in the market,” said Jagmohan Krishan, chairman, LSE. This includes the trading volumes of the capital market segment of the Bombay Stock Exchange (BSE), the National Stock Exchange (NSE) and the futures and options (derivatives) segment of the NSE.

Trading volumes of the sub brokers have been severely affected due to less transactions, he added.

Before March, trade used to hover around Rs 1,000 crore per day, but the hike in capital gains tax from 10 per cent to 15 per cent (Finance minister’s proposal to encourage investors to stay invested for a longer term) and the Security Transaction Tax imposed as a business expense, have put a damper on the trade volume.

The LSE has filed an application to the Securities and Exchange Board of India (Sebi) to start Depository Participant (DP) facilities at the exchange. At present, its subsidiary LSE Securities undertakes the DP operations. Krishnan added that currently, they have 40,000 DPs and it is expected that once the Sebi approval is granted, the number will increase significantly.

Also, the exchange has plans to tie-up with the Delhi Stock Exchange, Kanpur Stock Exchange and Jaipur Stock Exchange. The proposed tie-up is likely to help 4,000 companies listed in these local exchanges, whose capital is blocked at the moment, to increase their networth and benefit their shareholders.

Out of these 4,000 companies, around 3,200 are listed on the Delhi Stock Exchange, whereas 300 companies each on the Ludhiana and Kanpur exchanges, and the rest are in the Jaipur Stock Exchange.

It is worth mentioning that trading is not being done in all these four exchanges, so if things materialise, it would be a great step in reviving all these four exchanges also. The tie-up will help all these companies in increasing their net worth, as at present, the market value of their shares is almost zero.