Retail Investors Increase Speculative Trading In Volatile July

India's retail investors increased speculative trading via derivatives even as they pulled back on equity amid ongoing volatility stemming from global monetary tightening.

The retail category increased online exposure to the futures and options markets in the first four months of the ongoing financial year, according to data released by the National Stock Exchange of India Ltd.

Cash market turnover for the retail investors through internet-based trading has fallen 41.4% during the period. The number of unique retail investors trading in the NSE’s cash segment fell to its lowest in 15 months in July.

The average daily turnover of internet-based trading in the cash market segment increased 11.7% in July over June after declining for two months sequentially. The turnover was, however, 42.6% lower over a year earlier at Rs 8,989 crore.

Internet-based trades in the equity derivatives segment improved at a slower pace of 4.1% in July over June though it rose 28.7% over a year earlier, after declining for three consecutive months.

The rise in equity derivative turnover is primarily led by increased retail activity in stock futures and options in July. The turnover for these two segments, however, has fallen so far this fiscal.

Internet-based trading gained momentum in March 2020 due to increased retail participation, particularly since the nationwide Covid-19 lockdown. Retail investors and traders used to opportunity to trade in equities directly from their homes.

On an average, daily turnover through internet-based trading rose 70% year-on-year in the cash market to Rs 15,400 crore in FY21. In FY22, however, the growth was modest for the cash segment, while turnover of the equity derivatives segment fell 3% year-on-year, NSE data showed.

New investor registrations rose month-on-month 3% or by 10 lakh in July, following a 34% monthly fall in June.