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Volumes of delivery-based trades on exchanges have seen a significant decline since the beginning of the year, signalling loss of investor confidence.
Market analysts said that the erratic movement in the stock market brought on by weakening economic conditions and by the recent decline in rupee has made investors jittery about market performance.
Volatile market conditions has made the markets very fragile leading to sharp gains and losses in stock prices, particularly those of mid and small-caps, analysts said.
"Investors are a bit cautious as the stock price movements are highly volatile. Any negative news, whether big or small, leads to heavy price declines of about 20-30%, particularly in small and mid-cap stocks," said Alex Mathew, head of research at Geojit BNP Paribas Financial Services.
Analysts said that poor IPO performances were another reason for low investor confidence. Investors who had participated in the IPOs are sitting on heavy losses as most of these issuances are trading well below their issue prices, they said.
