Chart of the day: Cash market turnover is steadily increasing

Riken Mehta

Follow me on Twitter @mehtariken

May is turning out to be a good month for stock brokers, with daily average cash market turnover (both exchanges combined) touching Rs 25,000 crore. This is the highest in five years, and offers some relief for broking firms, which have been grappling with low volumes for some time now.  While total traded turnover on the bourses (cash + derivatives) has grown over four-fold in the last five years, much of the rise has been driven by increased activity in options contracts, where brokerage charges are a fraction of cash market transactions.

Till mid-2009, cash market turnover would track the rise and fall in benchmark indices. But things changed from 2010 onwards, with cash market turnover falling for extended periods even as benchmark indices were rising.

The rise in average daily cash market turnover in May has been sharp. Between September last year, when the market began rising, till April this year, average daily turnover ranged between Rs 14,000-17,000 crore.


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