As the 30-share Sensex of the Bombay Stock Exchange (BSE) is hanging around the 15,000 level , the average delivery volume on the stock exchanges (SEs), BSE andNSE, has shown a downward trend. Average delivery volume in July ?07 has further fallen to 39.5%, which was at 40% during June and around 41% during May 2007. The average delivery volume has touched a peak of over 43% in CY07.
Higher valuation, uncertainties regarding inflation, interest rate movement, rupee appreciation and first quarter results of technology stocks are among other factors creating high amount of nervousness among the market players. This has led to intra-day traders and speculators dominating the market resulting in the rise in the turnover but fall in the delivery volume. The average delivery volume on BSE and the NSE was the highest during the month of January 2007, when it constituted 43.36% out of the total volume.
Market experts say that when the markets are at a higher level, there will not be any major fresh commitment from long-term investors, particularly from the institutional investors. And at this point of time, the intra-day traders ramp up their activities on the bourses. Long-term investors commits when the valuations are compelling and reasonable.
Yogesh Radke, derivative research analyst, Edelweiss securities, said, ?When the market is peaking new highs, it is in the midst of lot of uncertainties as the territtory it settles in, is new for the all the set of players.
At this point of time, intra-day traders become active and attempt to dominate the market, resulting in a fall in the delivery volume at the exchanges. When the market crashes and reaches the bottomed out level, it becomes an investors market where the delivery volume once again begins to pick up.?
The dip in the delivery volume on the bourses in the month of June could also be attributed to the lower participation from the institutional investors who are permitted to execute only delivery-based transaction. In June 2007, Foreign Institutional Investors? (FIIs) net investment stood at meager Rs 1,643.10 crore when compared to their net buying worth Rs 3,959.70 crore during the month of May. Domestic mutual funds too had a low net investment to the tune of Rs 700.70 crore during the month of June when compared to their net buying of Rs 1,889.20 crore in the month of May.