GoI-Sec volumes decline at the start of consolidation phase

Our Banking Bureau

Mumbai, Sept 17: The turnover on the National Stock Exchange’s (NSE) wholesale debt market (WDM) has been declining steadily. During September to till date, the average trading volume dipped to Rs 2,650.36 crore from Rs 3,158 crore in August. Total turnover during this month was Rs 37,105.09 crore.

There has been a declining trend in GoI-Sec trading volumes since August, but the current fall in turnover is attributed to bearish market sentiment as a fallout of the recent global crisis.

“But, if you were to see beyond that, you can observe that the GoI-Sec market has actually entered into a consolidation phase after it registered huge turnovers in recent months,” an analyst pointed out.
Turnover on the NSE’s WDM dipped by 10 per cent during August to Rs 75,784 crore from Rs 84,629 crore in July. The average daily turover dropped to Rs 3,158 crore in August as against Rs 3,255 crore in the previous month.

“There was poor trading interest among the market participant in the wake of volatile and weak market conditions,” a dealer said, adding that the market has become cautious and was awaiting for the Reserve Bank of India (RBI) to reduce the bank rate.

The huge liquidity-drain due to RBI’s aggressive open market operation (OMO) in the last few trading days in August, also fuelled the bearish sentiment amongst the participants.

The RBI sucked out Rs 12,479 crore through its OMO window and price-auctions.

Although the prices were broadly in line with the going market rates, the OMO sales forced participants to become cautious.