Trading in Indian equity futures has again gathered steam in Singapore.
Compared to last year, the futures segment volumes of key Indian index Nifty rose 19 per cent to 1.2 million contracts on the Singapore Stock Exchange (SGX) in October , data from the overseas bourse show.
Interestingly, trading volumes in Nifty futures on the National Stock Exchange (NSE) fell 23.47 per cent per cent during the same period. The Nifty covers 23 sectors of the Indian economy and over 60 per cent of the total market capitalisation of the underlying bourse, NSE. Often, a rise in trading volumes of Indian indices in the overseas markets is viewed critically. According to analysts, this indicates that large institutions and traders were playing the Indian market elsewhere.
However, the current trading volumes of Nifty futures are still small compared to their 2008 levels. On an average, 12.43 million Nifty futures contracts were traded every month on SGX in 2008, compared to 1.44 million in 2007. The trigger for a rise in SGX Nifty volumes in 2008 was a partial ban on the use of participatory notes, the hot money instrument, to trade equity in India in 2008. The ban was later reversed .
Data from SGX on Wednesday show that over 12 million contracts of Nifty futures were traded on the bourse year-to-date. On the NSE, over 100 million Nifty contracts have been traded this year so far. Though the Nifty’s options contracts are listed on SGX, trading in these is yet to pick up in a big way.
Apart from the futures of the Indian benchmark index, other Asian indices whose futures are traded on SGX include MSCI Taiwan Index, Nikkei 225 Index, FTSE China A50 Index Futures and MSCI Singapore, among others. A total of 11 index futures contracts from Asian countries are traded on SGX. The combined volumes of all these indices increased 11 per cent year-on-year to 5.9 million contracts, says SGX.
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The daily average volume in the derivatives segment was 304,088 contracts — up 17 per cent on SGX last month. Almost all the global equity exchanges are struggling to gain volumes due to the global slowdown. On SGX, the turnover fell 38 per cent year-on-year to $28 billion “as global uncertainties continued to curb investor appetite”, the exchange said.
The daily average value for securities was $1.4 billion, down 35 per cent. Even on BSE and NSE, the equity market turnover has been down around 30-50 per cent this year.