Derivatives turnover on both the national exchanges has risen in the past three weeks owing to renewed interest from overseas investors and better liquidity. Both the benchmark indices the Sensex and the Nifty have risen by more than 19% in the year to date. In the last three weeks, the average weekly derivative turnover on the NSE has climbed from about R95,400 crore to R1.21 lakh crore to R1.40 lakh crore. The average weekly derivative turnover in the first week of January was about R83,400 crore.
?Derivatives turnover has surged because of improved participation from FIIs and arbitragers,? said Nandish Patel, senior derivatives analyst, Sharekhan. FIIs have purchased equities worth about $5 billion in the year to date.
The BSE too has seen an unusual spike in activity. Derivative turnover on the BSE had hovered around R3,000 crore till the first week of February this year. Market participants attribute this surge in volumes to the exchange?s liquidity enhancement incentive programmes (LEIPS). ?We are happy with the positive response to BSE?s efforts in our derivatives segment. We have over 400 members registered for LEIPS and about 120 members regularly participating,? said Madhu Kannan, managing director & CEO, BSE.
BSE has also pushed its expiry timeline to the end of the month, bringing it in line with its rival NSE. ?This change has helped participants to find arbitrage opportunities between the two exchanges, resulting in further increase in volumes,? said Yogesh Radke, head ? quantitative research, Edelweiss Securities.
Market participants expect high turnover to sustain as long as the exchange continues its LEIPS. ?If we continue to see such market making and voluminous trading days, traders and arbitragers could get attracted,? said Siddarth Bhamre, head – derivatives, Angel Broking.