Turnover of bourses dips 25% post-Budget

The BSE-500 stocks have gained over 28 per cent post-Budget, but the overall turnover on bourses has declined over 25 per cent since then. This, according to Citigroup Global Markets Research, is a discrepancy between the market movement and the strength of the rally. It hints at a typical period of weakness for the market in coming days.

However, retail investors seem to be back in the equity market as the volume of the non-A group stocks has gone up by over 40 per cent in August-September compared to over 25 per cent decline in the A-group stocks. The decline in the turnover of large-cap A-group stocks has increased market share of the non-A group (B and S group) stocks to 43 per cent in August-September from around 25-30 per cent in March-July.

“Retail investors have shown more buying interest in mid- and small-cap stocks and booked profits in large-cap stocks. Most of these second-rung stocks are still trading below their September 2008 level even though the S&P CNX Nifty crossed the 5,000-mark,” said Amitabh Chakraborty, president (equity) of Religare Capital Markets.

The average delivery-based trading of the non-A group stocks has increased to 43 per cent against 39 per cent of the total traded shares converted into delivery in the last two months. The fall in bank interest rates in the last couple of months is also the one reason for retail investors to return to equity markets for better returns. The one-year bank fixed deposit rate has declined to 6 per cent from 8.50 per cent in March 2009.

Jindal Saw, Aptech, Orchid Chemicals, Reliance Industrial Infrastructure, Hindustan Oil Exploration, NIIT, McLeod Russel, Rajesh Exports and Astra Microwave are among the few non-A group stocks witnessing over ten-fold increase in average daily turnover in the last six months on the back of huge buying support.