In March, there was a significant decline in daily trading volumes across the cash segment of exchanges, largely due to increased volatility in the equity market.
The average daily turnover in the equity cash segment of the National Stock Exchange (NSE) experienced a remarkable decline of 13.33 percent Month on Month (MoM), reaching ₹1.02 lakh crores. This decline marked the most significant drop since October 2023.
The average daily turnover in the share cash segment was ₹1.18 lakh crores. Before that, the average daily turnover in October was ₹67,175 crore, less than 20 percent of ₹84,381 crore in September.
After the decline in October, it rose above 9 percent MoM in November at ₹73,440 crore, then 41.5 percent MoM in December to cross ₹1 lakh crore for the first time even in FY24.
The first 2 months of the calendar year 2024 also saw strong growth. In January 2024, the average daily turnover in the equity cash segment was at ₹1.15 lakh crore, more than 10 percent from December 2023. Meanwhile, in February 2024, it further rose to ₹1.18 lakh crore, up nearly 3 percent MoM.
Before falling massively in October, the average daily turnover witnessed a steady increase between April and September.
Between April last year and March this year, the average daily turnover in the cash space jumped over 98 percent, which shows the strong demand for equity among investors.
A month | Average daily cash turnover ( ₹crore) |
April | 51,725.82 |
may | 60,063.07 |
june | 62,334.19 |
july | 73,381.96 |
Aug | 76,876.21 |
September | 84,381.28 |
Oct | 67,175.94 |
Nov | 73,440.74 |
Dec | 1,03,979.72 |
Jan | 1,14,796.82 |
Feb | 1,18,131.01 |
March | 1,02,589.48 |
Overall, Indian benchmark Nifty has delivered robust performance, rising around 25 percent in FY24. While most experts believe that the new financial year will also witness similar returns, they also advise caution in the near term due to high valuations and also the upcoming general elections.
Meanwhile, in March, while the benchmark Nifty experienced a 1.6 percent rise, the mid and small cap indices witnessed declines of 4.55 percent and 0.6 percent, respectively. Analysts attributed this trend to concerns raised by the Securities and Exchange Board of India regarding the valuations of mid- and small-cap stocks, which dampened investor sentiment and led to reduced participation in these segments. This in turn also led to a decrease in average daily turnover in the previous month.
Looking ahead, experts predict an improvement in investor participation. The recent milestone achieved by the S&P500 index in the US is expected to have a positive ripple effect on Indian equities. Meanwhile, foreign portfolios also showed notable interest in Indian stocks during March, and if this trend continues, it could support stock prices.
Moreover, market sentiments received a boost last week following a more dovish stance by the US Federal Reserve, which pushed global indices to record highs and boosted stocks. The Fed’s decision to keep interest rates aligned with market expectations, signaling no immediate plans for rate hikes despite a strong labor market. The Fed’s projection of three rate hikes for the year underscores the importance of a sustainable slowdown in inflation. Analysts suggest that ahead of the elections, the Nifty50 index may remain within a narrow range with an upward bias.
In addition, they added that the outcome of the Reserve Bank of India’s monetary policy review will be closely monitored for information on liquidity management and possible reductions in policy interest rates.
“Despite near-term volatility stemming from upcoming elections and mutual fund stress tests, our market outlook remains bullish. The Nifty 50 briefly corrected from 22,500 to 21,700 in mid-March before rebounding to close the financial year around 22,300, demonstrating resilience. Challenges remain, with expected volatility amid elections and upcoming Q4 results, underscoring the need for strategic decision-making. In particular, investors prefer stability, shifting from micro/small caps to mid/large caps. Amidst these changes, it is clear that careful navigation is key in today’s marketing environment,” said Robin Arya, GoalFi small case manager and founder.
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Published: 02 Apr 2024, 16:46 IST