Turnover in the NSE cash segment at Rs 40,151.91 crore surpassed the previous high of Rs 28,476 crore registered on November 1, 2007. The number of NSE trades touched an all-time high of 1.12 crore, with over 192 crore shares changing hands. The NSE is now the third-largest exchange in the world in terms of number of trades in the equity segment. At the NSEs currency derivative segment, too, the number of contracts clocked more than 1 million for the second consecutive day, with turnover crossing over $1 billion (Rs 4,845.72 crore).
Despite those figures, systems checks put in place by the two exchanges held firm. Said BSE head of corporate affairs Kalyan S Bose in a statement: All settlements were completed smoothly as per schedule. Further, there are no issues on margin collection. On Monday night, the two exchanges rechecked the ability of their IT systems to handle the pressure of record trade volumes.
The level of business was a follow through of the pent up demand from Monday, when trading on the markets was halted after just 60 seconds. In the cash segment, markets opened on Tuesday with a positive gap. The 30 share BSE Sensex opened the day at 14,757.82 points and touched an intra-day high of 14,930.54 points, then swung more than 1,000 points to a low of 13,834.13, before finally closing at 14,302.03 points.
According to Arihant Capital head of institutional business Anita Gandhi, From the start of the day, FIIs were buyers and domestic institutional investors (DIIs) were sellers, causing unpredictability throughout the trading session.
Provisional BSE data showed that FIIs made net purchases worth Rs 4,792.56 crore and DIIs net sold Rs 1,964.19 stocks. This is the second-highest net purchase made by FIIs after the Rs 5,837 crore on July 2, 2007. It is also the second instance of FIIs buying more than Rs 4,000 crore in the current month. The last time, it was huge DLF bulk deals to institutional investors that caused the rise. This time around, it was pure buying.
A fund manager with a leading Indian mutual fund said that many of the fund houses were churning their portfolio and realigning their strategies.
Also, this was a good time to book trading gains. Such obvious occasions dont come along every day. So, a lot of funds have booked trading gains as well, he added.
Hectic activity was witnessed as investors, both institutional and retail, flocked to the market. While some booked profits, there were fresh purchases also being made. Retail high net-worth individuals listed under the clients category on the BSE saw trading levels double. Average trading volumes that were around Rs 3,000 crore before the elections now jumped to over Rs 7,500 crore, according to BSE data. They are now expected to re-enter the market and pick stocks on dips, and this could be one way a higher-level market would be supported, say trade experts.
Action in the currency markets took its toll on IT sector stocks, which crashed across the board and were also responsible for a weak closing. Infosys Technologies tanked 11.65% to close at Rs 1,563.75 and Wipro 9.13% to Rs 385.90 as investors offloaded shares following the rapid appreciation of the rupee. On Tuesday, the rupee strengthened 0.3% to 47.775 per dollar at close, after touching an intra-day high of 47.27 in early trades, its strongest since December 19. Stocks of IT companies could expect further deterioration, as half their revenues are dollar based.
Overall, market breadth remained strong. Both small- and mid-cap indices closed in positive territory, and of 2,714 stocks traded on the BSE, 1,927 stocks advanced, with 739 stocks declining and 48 stocks unchanged. In the Sensex, 18 stocks ended in the green and the remaining 12 closed in the red.
Markets are expected to remain volatile with a strong upward bias, say experts. The fact that most domestic institutions have still not entered the market in a big way gives them hope of a correction not being too vicious.