Intense speculation lifts F&O, cash market turnover

As intense speculation gripped the domestic equity markets in 2006-07, the derivatives turnover shot up 52 per cent and the cash market saw a rise of 21 per cent in turnover.

The aggregate turnover of the cash and derivatives markets crossed the Rs 10 trillion (Rs 10 lakh crore) mark in the current financial year with derivatives sharing as much as 71 per cent and cash the remaining.

The combined turnover of both climbed 41 per cent to Rs 1,01,45,227 crore in 2006-07 against Rs 71,77,085 crore in 2005-06.

The turnover in the derivatives segment rose to Rs 72,94,257 crore in FY07 from Rs 48,24,253 crore last year, while the cash market turnover increased to Rs 28,50,970 crore from Rs 23,52,832 crore in FY06.

The National Stock Exchange (NSE) once again dominated the show accounting for 90 per cent of the total turnover. The total turnover of the NSE shot up 44 per cent to Rs 91,44,596 crore in from Rs 63,61,253 crore in FY05-06. The turnover in F&O zoomed 50 per cent from Rs 48,24,250 crore to Rs 72,37,494 crore, while the cash segment posted a turnover of Rs 19,07,101 crore, up 24 per cent from Rs 15,37,002 crore recorded in FY06.

The Bombay Stock Exchange's (BSE) turnover increased 23 per cent to Rs 10,00,632 crore in FY07 from Rs 8,15,829 crore in the previous financial year. For the BSE, the cash market turnover made for almost 94 per cent of the total turnover. The derivatives turnover accounted for a modest 6 per cent (Rs 56,763 crore) against a meagre 3 per cent in 2005-06.

The derivatives segment dominated the turnover growth, with its share in the total market turnover increasing from 67 per cent in FY06 to 71.3 per cent in the current financial year. In 2001-02, the derivatives market was 10 per cent of the total turnover. In 2002-03, its contribution was 32 per cent, which increased to 57 per cent in 2003-04 and further to 61 per cent in 2004-05.

While the market share of A group stocks to the total turnover rose from 59 per cent in FY06 to 68 per cent in FY07, that of non-A group counters declined from 41 per cent to 33 per cent in the current financial year. In 2004-05, the A group accounted for 77 per cent and the non-A group the balance of the total turnover.

During FY07, the top 10 stocks accounted for 37 per cent share of the total turnover, with Reliance Industries topping the chart making up almost 10 per cent of the total turnover.

Tata Steel accounted for 4.62 per cent market share, State Bank of India 3.61 per cent and Infosys Technologies 3.15 per cent of the total turnover. Satyam Computer Services, Tata Motors, Sterlite Industries, ACC, Century Textiles, Reliance Capital, Reliance Communications and India Cements accounted market shares in the range of 2 per cent to 3 per cent.