The average daily turnover (ADTV) for the equities cash market segment hit a 22-month high while that for the futures and options (F&O) segment continued to record new highs amid buoyancy in the broader markets in August.
The ADTV for the cash segment stood at Rs 83,446 crore (NSE and BSE combined), the highest since October 2021. Meanwhile, the ADTV for the futures and options segment stood at Rs 314 trillion. BSE showed encouraging market share gains both in the cash as well as derivatives segments, with its relaunched Sensex and Bankex derivatives gaining further acceptance among traders.
Though benchmark indices declined 2.3 per cent last month, the market breadth remained positive. On the BSE, 2,126 stocks have advanced, and 1,955 have declined in August, translating into an advance/decline ratio (ADR) of 1.1. Also, the small and mid-cap indices logged strong gains for a fifth straight month. Trading volumes also got a boost thanks to large share sales exceeding Rs 60,000 crore by promoters and private equity players.
Trading activity gets a boost when the underlying market conditions are strong. The ADR for the domestic market has remained above 1 since April amid outperformance in the broader market. Market experts said though the indices declined in August, the sentiment remained positive, boosting the risk appetite of traders.
“There are a lot of mid-cap stocks which are hitting their all-time highs and having large volumes. This is one of the reasons for the cash market hitting all-time highs,” observed Prakash Gagdani, Wholetime Director and Chief Business Officer at 5 Paisa.
G. Chokkalingam, founder of Equinomics, said millions of new investors are coming to markets every week.
“The mid and small-cap have rallied three times the indices; an outperformance of this magnitude is rare. When small caps outperform Sensex, retail participation increases cash trade. Moreover, retail participation in the derivative market has also increased recently.”
The relaunch of BSE’s Sensex and Bankex derivatives contracts has also helped expand the turnover pie for the F&O segment. BSE’s ADTV for the derivatives segment surged 2.4 times from Rs 4.3 trillion in July to Rs 10.5 trillion in August, leading to a market share improvement from 1.4 per cent to 3.4 per cent. Its market share in the cash segment rose from 6 per cent to 8.24 per cent, most in nearly a year. Its cash segment ADTV of Rs 6,878 crore was the highest in nearly 30 months.
BSE has reduced the lot sizes to attract investors and moved the expiry cycle to Friday. Emboldened by the positive response, BSE has now decided to shift the expiry for its Bankex contracts to Monday.
Following this, derivatives contracts will now expire on all five days a week. Starting with BSE Bankex on Monday (to be effective from October); NSE’s Nifty Financial Services (FinNifty) F&O contracts will expire on Tuesday; Bank Nifty on Wednesday, Nifty on Thursday, and the Sensex on Friday. Bourses expect that spreading out derivatives expiry across the week will act as a boost to trading activity.
“Sensex has kept a Friday expiry, a day after Nifty’s expiry on Thursday. This enables people to hedge between Nifty and Sensex. BSE’s lot size is lesser; hence, the value is lesser than Nifty derivatives. Derivative volumes have been going up even during bad market phases,” said Gagdani.
Amid the market share gains, shares of BSE have been on a tear. The stock has gained nearly 40 per cent in the past one month and surged 2.5 times this financial year.