Stock Trading Turnover Continues To Fall On Waning Retail Buying

The average daily turnover through internet-based trading contracted for the second straight month in June, indicating waning retail participation amid market volatility and foreign fund exodus.

The average daily internet-based turnover in the cash market declined 22.1% month-on-month and 53.3% year-on-year to Rs 8,044.1 crore in June, according to data provided by the National Stock Exchange.

In the equity derivatives segment, it declined to Rs 28,400 crore in June from Rs 3,1700 crore in May.

In the first quarter ended June, internet-based trading fell 41.1% to Rs 10,411.3 crore.

While retail participation is higher through mobiles, data for the category is not available. Still, decline in internet-based turnover is indicative of retail interest.

Internet trading gathered pace since March 2020 due to increased retail buying as the pandemic-led lockdown forced people to work from home. That was reflected in record addition of demat accounts in FY21.

The average daily turnover through internet-based trading rose 70% year-on-year in the cash market to reach Rs 15,400 crore in FY21. But the growth has since stagnated and the turnover remained flat in FY22 as equity markets have been volatile over valuations, rising energy costs and global supply-chain disruption, amplified by Russia’s invasion of Ukraine.

Retail stock buyers net invested Rs 11,600 crore directly in the market in June, marginally higher than May.

In the NSE cash segment, the contribution of internet and mobile-based trading has fallen consistently since the 2020 peak.

In the current financial year, the number of retail investors participating in the secondary markets and their overall share in gross turnover has fallen, the NSE said in its monthly Market Pulse.

The number of active retail investors in the cash market declined to 8.1 million from little under 10 million in May.

Net inflows have come off since May due to reduced trading activity by retail investors. The NSE cash market turnover has been declining since March because of a selloff by foreign investors and the falling retail participation.