Delivery-based turnover grows at a slower pace

STOCK MARKETS IN FIRST-HALF

Delivery-based turnover on both the bourses "" the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) "" moved up at a slower pace of 14.52 per cent in the first half of 2006-07 even as the total turnover on these bourses rose 31.2 per cent.

The slowdown in the pace of delivery-based trading is largely on account of a market meltdown in May and June this year when the Sensex registered over 30 per cent erosion.

Small-cap, mid-cap and trade-to-trade group stocks registered a higher value erosion than large cap stocks. Delivery is mandatory for trade-to-trade stocks.

The delivery-based turnover in the first half of 2006-07 aggregated to Rs 3,83,699 crore, accounting for 28.4 per cent of the aggregate turnover of Rs 13,58,917 crore.

In the first half of 2005-06, delivery turnover was at Rs 3,35,043 crore, accounting for 32.35 per cent of turnover of Rs 10, 35,762 crore. In other words, there is a sharp drop in the delivery-based turnover.

Between the two premier exchanges, the BSE reported 10.43 per decline in delivery volume while the NSE witnessed 34.5 per cent rise.

The delivery as a percentage of the turnover declined sharply on the BSE "" from 41.52 per cent in the first half of last year to 30.26 per cent in April-September in FY07. Stocks traded on NSE, in contrast, witnessed a marginal increase in delivery as percentage of total turnover "" from 27.48 per cent to 27.56 per cent.

After the market meltdown in May and June this year, the investors' preference has shifted to large cap stocks from small cap and mid cap stocks. This is reflected in the rise in the gross deliveries in 30 Sensex stocks. In the last two months, it rose to 44 per cent from 36.36 per cent in May and June.

The deliveries in the mid cap stocks declined from 40 per cent during the first quarter of the current fiscal to around 35 per cent in the second quarter while the delivery-based trading in small cap stocks remained virtually unchanged at around 45 per cent.

Even the BSE 500 stocks witnessed fall in delivery-based trading "" from a peak of 41 per cent in June to around 37 per cent in August and September.

Among trading groups, B and S groups attracted delivery of over 55 per cent during the first six months of the current financial year compared to around 39 per cent in A group and 40-44 per cent in B1 group.

All frontline large cap stocks are A groups stocks, while S group stocks are those which have a small equity base.

B and B1 denote mid cap and small cap stocks.