Retail surge drives NSE delivery volumes to six-year high

Mumbai: Retail participation, both directly and through mutual funds, increased the volume of deliveries on the NSE, India’s largest stock exchange, to a six-year high. The upward trend may continue unless the party is marred in the upcoming assembly and national elections due to global shenanigans or backlash.

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(Graphic: Mint)

The average percentage of value delivered to value traded so far in FY24, to October, is 26.1% , a six-year high. In absolute terms the value of the delivery stood at 3.92 trillion per trade value of 15.03 trillion. “SIP inflows are rising, which tend to be sticky, and increased direct retail participation is driving delivery value, indicating that the markets are growing,” said Shankar Sharma, founder of GQuant Investech, a wealth management company.

Sharma expects the bullishness to continue as long as US interest rates remain stable and the war in West Asia does not spill over into a regional conflict, which could send oil prices spiraling.

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. The total number of SIP accounts increased to 73 million in October from 63.6 million in FY23. SIP contribution so far in FY24 has been at 1.07 trillion against 1.56 trillion in total of FY23.

Kotak Mahindra AMC managing director Nilesh Shah believes that MF investments have played a role in increasing delivery. Silver futures arbitrage increased delivery volume and many stock futures contracts became forcibly deliverable, he said. ArbitSIP

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

Retail investors are putting money into small and midcaps directly and through MFs which have raised delivery volumes. Total direct retail inflow into the secondary market 21,900 crore in two months to September thereafter 21,400 crore were sold in April-July, making them net buyers 500 crores. In mutual funds the net inflow into small cap and mid cap funds was at 39,826 crore against 4974 crore outflow from independent large caps, according to Amfi data.

Gaurang Shah, senior vice-president, Geojit Financial Services, said the increase in delivery volume is attributable to retail interest in small and mid-cap stocks which outperformed the benchmark Nifty.

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

He expects markets to trade at 18500-20000 until the assembly election results are announced in December.

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