Nifty Futures Take A Beating, Average Daily Turnover Down 35% In April

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New Delhi, May 7: : Derivative trading seems to have hit a road block with political uncertainties taking the sheen away from the markets. Thanks to lower volatility and range-bound indices, the turnover in the Nifty futures segment on the National Stock Exchange (NSE) has taken a severe beating. As against Rs 115 crore in March 2002, the month of April saw the average daily turnover in Nifty futures slide 35 per cent to Rs 75 crore in April.

Even as the total volume in the derivative segment increased to Rs 21,674 crore in April as against Rs 20,490 crore, the average daily turnover figure plunge by 8.65 per cent to Rs 985 crore in April as against Rs 1,078 crore in March and Rs 1,081 crore in the month of February. This decline is in line with the trend in the cash segment which has also been hit by low trading activity.

Volumes have been on a southward journey since the past couple of months after a consistent increase since November 2001, when individual stock futures were launched. The product had been an instant hit and had taken the volumes to stratospheric levels within months of its introduction.

According to a Delhi-based NSE broker, "Indices have been flat in the past couple of months and the volatility has come down drastically. As a result, the margins in the derivative products have also reduced, giving lesser opportunities to the operators to speculate. This has led to the decline in volumes in Nifty futures."

Besides Nifty futures, other derivative products, viz, Nifty options, stock futures and stock options, also recorded lower volumes in April. While average daily turnover in the Nifty options segment declined 8.36 per cent to Rs 17 crore in April from Rs 19 crore in March, stock futures and options saw the figure slide 7 per cent and 0.21 per cent respectively.

According to an analyst, "The decline in average daily turnover was not so sharp in individual stock future and option segment as some of the underlying scrips like Satyam and Digital continued to be volatile during the period and provided better margins and trading opportunities." The contracts of the underlying securities like Satyam, Infosys, Reliance, Digital, HPCL and Sterlite Optical were the highest traded in individual stock future and option segment.