Trading volumes spurt in June; buoyancy in stock market boosts activity

Turnover in cash market segment doubles in June after increased interest from young investors

The stock market space is emerging as a bright spot amid the economic gloom in the country. Trading turnover in the cash market segment of both National Stock Exchange (NSE) and BSE nearly doubled in June on a year-on-year (YoY) basis. 

The average daily trading volume (ADTV) for June on the NSE was Rs 61,400 crore, a YoY jump of 95 per cent. The BSE’s ADTV of Rs 5,000 crore, too, was double the June 2019 figure, the data compiled by ICICI Securities showed. Equity and currency derivatives, and mutual fund (MF) trading also witnessed a jump in volumes. The buoyancy in the stock market, especially in the broader markets, coupled with the entry of new investors, has increased activity, said experts.

“The spurt in volumes in June was mainly driven by the market volatility and positive sentiment around mid-cap and small-cap stocks. Also, work-from-home is helping clients connect with the markets through digital tools. Of the total number of accounts being opened across broking houses, about 60 per cent are new investors and many of them are coming from tier- II & III cities,” said Ajay Menon, MD & CEO, Motilal Oswal Broking and Distribution.

 

 

Online account openings and user-friendly mobile applications are helping fetch new investors into the equity market fold, said experts. “A lot of people have turned to trading since the lockdown was declared. There is a craze among young people to get an online account and start trading. It is a post-Covid outbreak trend and started with the need to kill time. Moreover, prices were attractive in March, and investors made money during this period,” said Rajesh Baheti, MD, Crossseas Capital Services.

After dropping as much as 40 per cent from their all-time highs, the markets have staged a sharp recovery. The benchmark Nifty jumped 20 per cent during the June quarter — its best quarterly showing in 11 years. Also, the stocks in the small- and mid-cap space have seen huge gains from their mid-May levels. The equity derivatives’ segment —where the NSE has near-monopoly — saw the ADTV increase 23 per cent YoY to Rs 16.7 trillion (notional turnover for the options segment) in June.

“There is renewed interest in the markets from new investors. The new-age investors are also open to experimenting with derivatives trading,” said Alok Churiwala, MD, Churiwala Securities.