While the Sensex lost 1,290.21 points or 4.93% in January and the Nifty lost 399.65 points or 5.02% amid major market corrections, the daily average turnover in the cash and derivatives market segments jumped as much as 13% and 27% as compared to December 2015.
As per data from the stock exchanges, the equity market segment saw a daily turnover of R20,782 crore, while the derivative segment attracted R2.98 lakh crore of daily turnover both the highest in five months.
Growth in the cash and derivative market segments has been seen since August 2015. Even in February, in just 11 trading sessions the average daily turnovers of both cash and derivative markets are at R20,131 crore and R2.69 lakh crore respectively.
In a month when foreign investors pulled out funds close to $1.74 billion, domestic funds turned buyers buying mostly mid cap and small cap stocks.
“FII selling has been unabated from the start of the year while domestic investors have also turned alert. However during the results season, we find a lot of activity,” Rikesh Parikh, vice-president, Motilal Oswal Financial Services, said.
According to derivatives dealers, due to the choppiness in the market the trading interest remains muted but there are players that are “short-heavy”, especially on the futures side.
A recent report by ICICI Securities noted that risk aversion of retail investors could hinder the pace of robust domestic investment flows. “However, in the best-case scenario of a reduced volatility in global equity markets, India with its strong fundamentals can be a favourable destination for stable foreign investment inflows,” the report observed.