The growth in cash market turnover of exchanges slowed to 38.3% year-on-year in the fiscal ended March 31, 2025 to Rs 300 lakh crore, data from the annual report of Securities & Exchange Board of India showed Tuesday.
The Cash Market’s Performance and Key Drivers
In the previous fiscal, the segment turnover was at Rs 217 lakh crore up 51.6% from FY23 when the turnover had fallen nearly 20%. Mrugank M Paranjape, the chairperson of the IMC Task force on Capital Markets and Managing Partner MCQube, said 38% is good but not a great number and India should always aspire for more growth as capital raise is the primary function of secondary markets and as the underlying stock prices are also growing.
According to the report, at the end of March 31 2025, the all India market capitalisation expanded by 6.9% from last fiscal to Rs 414 lakh crore, ranking fifth in the world. It noted Strong earning reports attract more investors, leading to higher turnover in those specific stocks and the broader market. “The PE ratios (trailing) for Nifty 50 fell to 21.4 at the end of March 31, 2025 from 22.9 at end of 2023-24,” it said. However, the valuation of Nifty 50remained high compared to Brazil, China and other developed markets, except USA.”
Sebi whole time member Ananth Narayan said at a recent event that there is a need to deepen the cash market while extending tenure of and maturity of products currently offered by stock exchanges.
“Reduced Securities Transaction Tax (STT) in the cash segment and lowering margins will further boost the turnover,” Paranjape said. Kamlesh Shroff, MD at Omniscient Securities agreed that STT should be lowered as it is significantly higher than that of the derivatives market. He expects the turnover to rise more this year as F&O volumes will go to the cash market, he said.
Sebi chairman Tuhin Pandey at a recent event clarified that no formal communication has happened with the finance ministry on the proposal but any step to reduce STT will be part of a co-creative process.
Index options premium falls
The index options premium turnover growth has also slowed in FY25 to 10.5% in FY25 from 30.6% last fiscal and 87.5% in the year before it. As of March end 2025, NSE had 85.86% market share in the segment. Strengthening of index derivatives framework by the Securities & Exchange Board of India aimed at curbing speculative activity and promoting market stability in the segment led to a fall in the country’s largest stock exchange’s index options premium turnover for the first time in eight financial years, Sebi annual report said on Tuesday.
The exchange’s turnover slipped 2% YoY to Rs 136 lakh crore in FY25. Its average monthly premium turnover of index options plunged from Rs 12.4 lakh crore in the first eight months to Rs 9.1 lakh crore in the last four months.
However, it said that this drop in trading activity at NSE was partly offset by the simultaneous rise in volumes at BSE. Average monthly premium turnover at BSE increased to Rs 2.3 lakh crore in the last four months from Rs 1.6 lakh crore in the first eight months and Rs 0.4 lakh crore during 2023-24.