The recent decline in Indian equities has had a spillover effect on the business of stock exchanges, with the average daily turnover in June slipping to the lowest in 13 months. The combined average daily turnover in the cash and derivatives segment of BSE and NSE stood at a little over Rs 2.37 lakh crore in June, down 21% from the previous month and 44% lower from the peak turnover seen in November 2014.
Experts said there is a direct correlation between market performance and the level of participation. The volatility in markets have impacted the performance, thereby impacting investment psyche.
“There are multiple variables playing out at the moment – corporate earnings, poor monsoon forecast and contagion risks of Greece’s exit from the euro zone. Given the sharp run-up in Indian equities in the past 12 months, we may see the volatility to continue for the next three-four months. This could further impact market performance and participation in the near-to-medium term,” said Vaibhav Sanghavi, MD, Ambit Investment Advisors.
Data suggests that turnover picked up after the 2014 general elections that saw the Narendra Modi-led National Democratic Alliance (NDA) win by a huge margin but has dwindled steadily since the start of 2015 as volatility returned to the stock market.