Sailing through tough times: Average daily turnovers in cash hit record highs in September despite turbulent market

The combined ADTV for NSE and BSE reached Rs 91,710 crore while the combined F&O turnover hit Rs 326 lakh crore during the month

The equities cash market segment clocked record-high average daily turnover (ADTV), while the futures and options (F&O) segment also set new highs in September, despite significant market volatility.

The combined ADTV for NSE and BSE reached an all-time high of Rs 91,710 crore in September, up 10.3 percent from the previous month. Meanwhile, combined future and option average daily turnover for both exchanges hit a fresh all-time high of Rs 326 lakh crore during the month.

Analysts attributed several factors to the ADTV surge, including IPO listings, particularly from the SME segment, that attracted investor funds. Additionally, the month witnessed numerous block deals, with promoters, government entities, and large fund houses or individual investors either booking profits or increasing trade volumes.

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"Increased IPO activity and a surge in demat account openings, totalling 3 million in July and 3.1 million in August 2023, the highest since January 2022, highlight growing retail interest in the stock market. Additionally, the number of active NSE users rose for the second consecutive month to 32.7 million in August 2023, up from 31.9 million in July 2023. This positive sentiment persists despite declining indices, boosting investor risk appetite," said Sneha Poddar, AVP Research, Broking & Distribution, Motilal Oswal Financial Services.

India's Nifty has only retreated around 3.5 percent from its recent highs while the Nasdaq and S&P 500 in the US have experienced pullbacks of 10 percent and 7 percent, respectively. This indicates that India has, to some extent, sidestepped the more significant pullback seen in the US, highlighting the positive momentum in the Indian markets, as evidenced by the ADTV surge, analysts said.

Booming market

"The market's volatility, combined with trading volumes shooting through the roof, is a clear sign that investors are pumped up, market sentiments are positive. A flood of new investors, plenty of liquidity, and AI-driven trading tools are making everything even more intense," said Shrey Jain, Founder, SAS Online, a deep discount brokerage platform.

As the domestic market shows strong long-term growth potential despite global concerns, analysts see no major challenges ahead. Though there are negative FII inflows this month, long-term investors may see them as investment opportunities. The upcoming festive season should enhance the positive sentiment and support the economic recovery, analysts added.

Historically, in the last five general elections from 1999 to 2019, the Nifty 50 has rallied at least 10 percent six months before the election results were announced. Following this trend, the medium-term outlook appears positive, with a potential for significant momentum leading up to the next election, analysts said. Analysts are now watching the crude oil movement, which has hit $97 per barrel, and awaiting macro-economic data like GST, PMI, Auto numbers and September quarter earnings.

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"We have seen strong buying interest by domestic institutions with a gradual decline from foreign institutions after strong inflows last month. The economy is in good shape with the current account deficit sorted, GST collections rising MoM and the GDP growth outlook getting re-rated on the upper side by various institutions like Nomura and Morgan Stanley. We believe it will continue going ahead as well. So the foundation looks strong for investors to build portfolios. This is a buying on dips kind of market, and the inflation fears and rate hike concerns are unlikely to dampen the momentum," said Raj Vyas, VP-Research, Teji Mandi.

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