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Informist, Monday, Aug. 25, 2025

 

By Rajesh Gajra

 

NEW DELHI – A five-month low in the average daily turnover of the equity cash segment in July, in contrast with a rise in overall investor participation, indicated a shift in trading dynamics, the National Stock Exchange of India said in its monthly publication Market Pulse, released on Monday. The segment saw a 16.3% on-month fall in average daily turnover at nearly INR 950 billion in July, the lowest in five months. The turnover had risen consecutively on a month-on-month basis in the trailing four months.

 

"A deeper analysis shows that the contraction in turnover was primarily driven by high-ticket investors that recorded a decline in activity from the equity cash segment," the stock exchange's economic policy and research division said in the latest publication. This stood in contrast with the participation of 12.7 million individual investors participating in the equity cash segment in July, "marking the fourth straight month of growth and reaching a six-month high," it said.

 

It said in July, on a month-on-month basis in the equity cash segment, "trading in InvITs (infrastructure investment trusts) saw the sharpest fall at 38%, followed by sovereign gold bonds at 30%, mainboard equities at 16% and ETFs (exchange traded funds) at 14%." In contrast, "standing out amid the broader decline," the companies listed on the NSE Emerge platform for small and medium enterprises recorded a marginal increase in their average daily turnover.

 

In the equity derivatives segment, the index options average daily premium turnover hit the lowest level in 32 months in July on the NSE, while that in stock options was at a 20-month low. In equity futures, both index futures and stock futures hit their lowest levels in 20 months, the exchange said in the latest monthly publication.

 

In July, equity index options premium average daily turnover declined 11% on month to INR 374.3 billion and that of stock options fell 13.9% on month to INR 61.5 billion. Compared to the year-ago period, index options premium turnover was down 37%, the exchange said.

 

The analysts at NSE's economic policy research division said, "A deeper look at equity options turnover by day reveals an interesting pattern." In July, trading in weekly index options around contract expiry rose 15-21% on month and fell 11-27% on the remaining days of the week, but the average trade size declined to their lowest level in the past seven months, the research division of the exchange said.

 

Within index options trading on the NSE, Nifty 50 contracts made up for 85.6% of the total index options premium turnover in July, down from 86% in the trailing month, the data showed. The Nifty 50 options average daily premium turnover declined 11.1% on month to INR 320.4 billion in July, while that for Nifty Bank declined 12.5% to INR 45.4 billion.

 

The Nifty Bank made up for 12.1% of the index options premium turnover in July, down from 12.4% in June. This index's share has fallen considerably since the weekly contracts on it were discontinued at the end of November following the Securities and Exchange Board of India's new directives to stock exchanges on restricting weekly expiry to only one broad-based index per stock exchange.

 

The remaining three indices on which index options contracts are available on the NSE – Nifty Financial Services, Nifty Midcap Select, and Nifty Next 50 – saw their collective share in the total index options premium turnover jump to 2.3% in July from 1.7% in the trailing month, the data showed.

 

In the commodity derivatives segment of the NSE, the launch of electricity futures trading in mid-July spurred the average daily turnover of commodity futures to INR 455 million in July from INR 39 million in June. Electricity futures accounted for 93% of the total commodity futures turnover in July. Commodity options premium average daily turnover rose to INR 348 million from INR 260 million.

 

In the commodity futures segment, the share of brokers' trading terminal usage jumped sharply by 2,118 basis points on month to 90.3% in July, reflecting increased participation from proprietary traders, according to NSE's research division. "In contrast, commodity options saw the share of Direct Market Access (DMA) rise by 436 bps (basis points) MoM (month-on-month) to a record 4.7%, driven by growing institutional investor activity," it said in the latest monthly publication. There was also renewed interest from individual investors due to a rise in premium turnover as indicated by the share of mobile trading in commodity options rebounding after four months of decline, it said.

 

The 12.7 million individual investors who participated in NSE's equity cash segment in July marked the fourth straight month of growth but it still remained sharply below the peak of 15.7 million individual investors recorded in September, the exchange said in the latest publication. The situation was worse in the equity derivatives segment, where the number of participating individual investors declined to 3.3 million in July from 3.4 million in the trailing month and was substantially below the peak of 5.3 million individual investors in June last year.

 

"Notably, investor participation in the equity options market has fallen by 26% since October, with over 80% of this decline attributable to the investors who traded below Rs 10 lakh (INR 1 million) premium, once again pointing to the reduced participation from small-ticket investors following the regulatory changes," the exchange said. The concentration of premium turnover remained elevated with 0.2% of investors trading in the highest turnover brackets contributing 68.7% of premium turnover in July, only slightly lower than 69.7% in June, it said.

 

The contraction in investor participation across all three segments--equity cash, equity options, and equity futures, has been the most concentrated in lower turnover brackets, the exchange said. It reflected the broader impact of the regulatory tightening introduced in November, it said.  End

 

Edited by Avishek Dutta

 

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