Average monthly stock delivery volumes on the BSE and NSE have dipped to 35.6 per cent in April, the lowest since November 2009. In April 2018, a little over one-third of the total traded quantity was converted into delivery, as compared to over half of the traded shares converted into delivery in March 2017.
According to the month-wise data compiled by Business Standard Research Bureau, the delivery ratio---the percentage of shares actually changing hands in relation to the total traded quantity — was about 35.6 per cent in April, the lowest in nearly eight years.
In March 2017, however, this ratio was at an all-time high with 52.6 per cent of the traded shares converted into delivery. The S&P BSE Sensex was trading around 30,000 levels then, and rallied over 6,000 points over the next nine months to hit a record high of 36,444 in intra-day trade on January 29, 2018.
Deven Choksey, managing director, KR Choksey Investment Managers says the delivery-based trading has partly suffered at the hands of the futures & options (derivative) market where there is rampant speculative activity.
“The overall trading activity has come down in the last two months, as the rally in the mid-and small-caps has punctured. Mutual funds also aren’t buying into these two segments. The markets
always pass through an adjustment period. The current situation – global and domestic developments lined up over the next few months – is also resulting in lack of activity in the market. Going ahead, things should normalise and the delivery-based volumes should pick up,” Choksey says.
In terms of sectors, banking, refineries, information technology, telecommunications, pharmaceuticals and mining have seen a substantial fall in the average monthly delivery volumes from their March 2017 level.
“Investors preferred to stay away from sectors that were not likely to do well. It was more a fundamental call on how the sector and companies were likely to perform. As a result, the delivery-based volumes crashed. Telecom (due to intense competition), banking (uncertainty as regards non-performing assets) and refineries (linked to global oil prices) saw investors steer clear of these segments,” explains Siddhartha Khemka, vice-president and head of research (retail) at Motilal Oswal Securities.
Though the extent of fall in the average monthly delivery volumes of cigarette, power, cement, auto ancillary and electrical equipment sectors is less as compared to 13 months ago, the volumes have seen a substantial rise over the previous month i.e. March 2018.
“Good quality mid-and small-cap stocks had been beaten down badly in the recent past. There could be some value buying emerging in those counters. As a result, the above-mentioned sectors could be seeing some delivery-based trades. That apart, an uptick in business prospects in some cases could be drawing investors to those scrips,” explains G Chokkalingam, founder and managing director at Equinomics Research.