Retail surge drives NSE delivery volumes to six-year high

Mumbai: Increased retail participation, directly as well as via mutual funds, pushed up delivery volumes on the NSE, India’s largest stock exchange, to a six-year high. The upward trend could continue unless global headwinds or anti-incumbency spoils the party in the upcoming assembly and national elections.


(Graphics: Mint)

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(Graphics: Mint)

The average percentage of delivery value to traded value so far in FY24, until October, stands at 26.1% , the highest in six years. In absolute terms value of delivery stood at 3.92 trillion against traded value of 15.03 trillion. “The rising SIP inflow, which tends to be sticky, and increased direct retail participation are fuelling delivery value, which shows the markets are getting deeper,” said Shankar Sharma, founder of GQuant Investech, a wealth management company.

Sharma expects the uptrend to continue as long as US interest rates are steady and the war in West Asia doesn’t snowball into a regional conflict, which could send oil prices spiralling.

Since June, SIP inflows have been touching record highs every month. In October, they were at 16,928 crore , up from 14,734 crore in June. Total number of SIP accounts grew to 73 million in October from 63.6 million in FY23. SIP contribution so far in FY24 was at 1.07 trillion against 1.56 trillion in the whole of FY23.

Kotak Mahindra AMC managing director Nilesh Shah is of the view that MF investments have played a role in increasing delivery . Cash-future arbitrage increased delivery volumes with many stock futures contracts becoming compulsorily deliverable, he added. ArbitSIP

rage involves taking two different positions on the same share in the cash and futures markets to exploit price differences. To be sure , apart from value, the number of shares traded has jumped during this fiscal year, with the percentage of delivery (22.5%) to traded quantity at the highest in five years. In FY19, it was at 23.04%.

Retail investors are pumping in money into small- and mid-caps directly and through MFs which pushed up delivery volumes. Direct retail inflows into secondary market totalled 21,900 crore in two months to September after 21,400 crore was sold in April-July, making them net buyers of 500 crore. In mutual funds the net inflows into small- and mid-cap funds was at 39,826 crore against 4974 crore outflows from standalone large caps, according to Amfi data.

Gaurang Shah, senior VP, Geojit Financial Services, said the rise in delivery volumes is attributable to retail interest in smalls and mid-cap shares that have outperformed the benchmark Nifty .

Since the beginning of the fiscal year through October end, while Nifty rose 10%, Nifty Midcap 150 index has jumped 28% and the Nifty Smallcap 250 surged 37%.

He expects markets to trade at 18500-20000 till assembly elections results are declared in December .

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