Statsguru: 4 April 2011

India’s bounce-back from its multiyear low on March 9, 2009 has been sharp and steeper than other equity or commodity benchmarks and relatively broad-based. But the domestic market marginally underperformed the global equity markets in the financial year 2011 on concerns of inflation, allegations of corruption and a slowdown in quarterly earnings growth rate.

The Sensex’s one year return at 11 per cent was significantly lower than 94 per cent by neighbouring Sri Lanka’s All Shares index. Next door, the Karachi-100 index also did well with a 16 per cent appreciation. Stock markets in Indonesia, Germany and the US managed an edge over India while Japan suffered more than a 10 per cent value erosion due to the massive tsunami and earthquake.

The low-key performance of the equity markets was reflected in the cash market turnover, which declined 15 per cent as investors stayed away from delivery-based trading. The IPO market, too, did not get good response as most new offerings posted negative returns after listing. No wonder the IPO index compiled by the Bombay Stock Exchange declined 13 per cent.

Speculative trading was rampant as turnover in the derivatives segment increased 69 per cent to Rs 493 lakh crore. The F&O segment of National Stock Exchange continued to be big daddy with a 50 per cent-plus share. Currency futures, introduced in 2008-09 for institutional players, accounted for a 15.3 per cent share while commodity futures, caught in the inflationary measures, witnessed a drop in the market share. (Click here of graph)

Trading in derivatives contracts on regulated exchanges worldwide surged to their highest levels in nearly a decade in 2010, according to statistics compiled by the World Federation of Exchanges (WFE). More than 22.3 billion derivative contracts were traded on exchanges worldwide in 2010 (11.2 billion futures and 11.1 billion options) against 17.8 billion in 2009. The growth rate (+25 per cent) is one of the highest since 2003. The number of futures traded increased faster (+35 per cent) than options (+16 per cent), according to WFE, which annually conducts a survey for the International Options Markets Association (IOMA). The National Stock Exchange, which ranked at No 7 in the global charts in term of derivative contracts, underperformed with a four per cent rise.