The average daily turnover in the cash market has surged to an eight-month high in May, propelled by the recent rally in Indian equity markets, in a sign of renewed market depth and growing investor confidence.
So far in May, the combined average daily turnover of the BSE and NSE cash segments has touched Rs 1.16 lakh crore - highest since September 2024 - representing an 8 percent rise from a month ago. This also marks the third consecutive month of growth in cash market turnover.
Since bottoming out at a 15-month low in February, the combined turnover has recovered by over 20 percent so far, highlighting a robust revival in trading activity. According to several analysts, the recent rise in cash market turnover can be partly attributed to a spurt in block and bulk deals. Notable recent deals include those involving TD Power, Swiggy, Nykaa, Indus Tower, KPR Mill, Eternal, and Vishal Mega Mart among others.
Narinder Wadhwa, Managing Director & CEO of SKI Capital Services said relief on the tariff front (particularly US-China, US-India) and a ceasefire with Pakistan have eased geopolitical concerns, thus making investors more comfortable with adding exposure.
So far in May, benchmark indices Sensex and Nifty have gained over 2.5 percent while the broader markets have outperformed, with the BSE Midcap index rising over 5.2 percent and the BSE Smallcap up more than 9 percent. Since the mid-April lows, both leading benchmark indices have recovered over 12 percent, with the BSE Midcap and Smallcap indices rising over 15 percent and 17 percent, respectively, reflecting a strong momentum in the broader market.
Experts said the recovery from February lows has been steady, as India remains fundamentally strong, with Q4FY25 earnings in key sectors turning out better than anticipated. Interestingly, FIIs have turned net buyers, infusing over Rs 13,000 crore since the start of May, reversing their previous selling trend, adding depth to the uptrend.
Broader market participation is also visible, with mid and smallcap indices outperforming largecaps this month. Additionally, liquidity support from the RBI through two rate cuts so far in 2025 has helped strengthen sentiment, experts said.
Mayank Mundhra, FRM - VP Risk & Head Research at Abans Financial Services said the uptick in turnover could be the start of a more broad-based and sustainable upward bias, driven by improving macros and rising risk appetite.
Meanwhile, the combined average daily turnover in the F&O segment across both exchanges has declined by over 6 percent month-on-month to Rs 215.72 lakh crore. Within the segment, stock futures saw a sharp drop of 22 percent, while index futures and index options registered declines of over 6 percent each. In contrast, stock options posted a modest month-on-month increase of 5.7 percent.
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