NSE Volumes at a 5 year Low

9 comments Written on December 27th, 2011 by
Categories: ChartOfTheDay

With a turnover of just 5138 cr., December 26, 2011 has taken volumes to a (near) five year low.

image

(You have to ignore Diwali Mahurat trading days, the big upper circuit day in May 2009 and a few saturdays of test trading by the NSE)

The chart says it all. Markets are dying.

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The man behind Capital Mind. Deepak is a co-founder at MarketVision, a financial knowledge company. Deepak also provides data research and consulting services, and now lives in Bangalore. Connect with him at deepakshenoy@gmail.com.

9 comments “NSE Volumes at a 5 year Low”

Some more facts

Cash trading volumesAt a seven-year low

Derivatives trading volumes At record Levels

Options trading volumes Share in derivatives trading risen to 76% from 68% (in 2010) and 52% (in 2009)

Trading Activity in ‘11: Options Trading Account for 3/4ths of Total Derivatives Trading

Volatility in ‘11: Hedging Activity at Record levels

This is as per some foreign broking reports ( assuming it to be reliable )

Never seen such apathy towards equities in the past many years.

Good points Nooresh. Options though are mentioend at notional, not premium so a lot of nifty options that trade at 1 or 2 rupees give Rs. 5000 worth of turnover :)

Markets are dying ? Doesnt it simply mean that this is because most traders are on holidays . Even from the chart there are no clear patterns seen over these 5 years.

The trend is now clearly downwards, and volumes have been abysmal the last few months. India’s GDP has doubled in the meantime – you would expect people to put more money into the markets, but no, they clearly don’t want to. The markets are indeed dyign away…

So what are your views on our dying markets?
Is it a good idea to start taking long calls or is it advisable to wait and watch for the time being?

I really wonder what GDP has to do with share market? What matters is profit, right? If top line has doubled and bottom line remained the same, then why I should pay more for the share?

Technically that means lowered margins which means you’ll pay less. But it also means that growth doesn’t mean profit, at a macro level (which is true, check the Nifty EPS after five years, growth is really little). That means we are paying a similar p/e to what we were paying five years ago, despite little growth…and volumes suck as well.

With due respect……………. the tide will turn.
Just have patience. We have been around long enough to know there are cycles. I keep seeing people buy the media hype and cr_p.

Go to the gym, spend time with your kids, focus on your health.
This will turn …….. be alert then and forget all the surrounding gloom/doom news. Just totally shutout the negativity. (This suggestion is for those sitting in 95%+ in cash. For those sitting in 95%+ equity, God bless! ).

As a layman reading of this chart .. Market looks at bottom of trading volume range .. so possible directions

1) define new low
2) remain at same volume level for a while ..
3) takeoff from now ..

Which has higher probability 1), 2) or 3) .. each one’ own guess :)