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Investor Chill: Trading Volumes Hit Two-Year Low
17 Dec
Summary
- Equity market turnover fell to nearly a two-year low in December.
- Mid and small-cap stocks significantly underperformed this year.
- Retail trading volumes down nearly 20% year-over-year due to weak market breadth.
Investor engagement in the stock market has significantly waned, reaching subdued levels not seen in almost two years. The average daily turnover for equity trades on the NSE in December has dipped to ₹90,076 crore, marking the lowest point since November 2023.
This reduction in trading activity contrasts with the Sensex and Nifty recently touching all-time highs. Analysts attribute the lower volumes to the underperformance of small- and mid-cap stocks, which has led to reduced trading churn and investor hesitancy, even as domestic institutions absorb foreign portfolio investor selling.
The impact is felt across investor segments, with retail traders, high-net-worth individuals, and even institutional participants scaling back. Brokers are anticipating softer third-quarter earnings due to this significant drop in trading volumes, with future market activity contingent on foreign investor reallocations.
