Trading volumes soar as demat tally surpasses 102.5 million accounts

Cash market turnover up 41% from June lows; derivatives logs fresh all-time high

Equity trading volumes have seen a revival from June lows amid a rebound in the equities market and sustained influx of new investors.

The average daily turnover (ADTV) for the cash market segment (both NSE and BSE combined) stood at Rs 66,914 crore in September, up 4.3 per cent month-on-month (MoM) and up 41 per cent from the June levels. ADTV for the cash segment, however, is still 8 per cent below the April tally of Rs 73,245 crore.

Meanwhile, the derivatives segment recorded new trading volume all-time highs, supported by the options segment. The ADTV for the futures and options (F&O) segment (both NSE and BSE combined) stood at Rs 15.3 trillion (notional turnover) in September, up 12 per MoM and 37 per cent from June levels.

Industry officials said retail traders have once again got active, following the sharp rebound in the market from the June lows. The retail interest is also evident from an increase in demat account tally. In August, the country's demat account tally topped the 100 million mark for the first time, with over 2.2 million new accounts – most in four months — getting added. In September another 2.11 million were added, taking the total count to 102.61 million.

"Despite the volatility, millions of new investors came in September and they were taking positions aggressively, especially in the small- and mid-cap space. Even though the index posted negative returns in September, the advance decline was unaffected. Volumes will improve substantially in October and November. The rate hikes in the US are likely to peak. Oil and commodity prices are easing, and inflation is likely to come down. Despite all the downgrades, India will post 7 per cent GDP growth rate and would outperform its global peers," said G. Chokkalingam, founder, Equinomics.

In September, the markets saw a spike in volatility with the Federal Reserve’s aggressive monetary stance triggering a surge in the US dollar and Treasury. The Nifty50 index fell 3.74 per cent, the Nifty Midcap 100 declined 2.6 per cent and the Nifty Smallcap 100 index fell 1.9 per cent. Foreign portfolio investor (FPI) flows also turned negative for the first time in three months. They sold shares worth over Rs 13,000 crore in September.

The fall in the domestic market was, however, far less severe than what was experienced by its global peers. For instance, the Dow Jones index of the US dropped 9 per cent last month. However, it has seen a sharp rebound, jumping 5.5 per cent during the first two days of the week. The change in sentiment in the US is also expected to support domestic equities and trading volumes.

"Despite the bouts of correction, as long as there is an overall upward trajectory, we will see participation come back. Trading for Indian retail has always been on the bullish side. When volatility rises and the downward trend increases, the stop-losses start getting triggered, and investors move out of the market,” said E Prasanth Prabhakaran, CEO, Yes Securities.