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G. Madhan

TRADING interest remained lacklustre in two major stock exchanges - the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) in the last 6 months.

An analysis of the turnover level trends for the six months period ending April 2003 reveals that the trading value has dropped in the BSE by 14.7 per cent (in value terms) to Rs 1,50,839 crore, from the corresponding period of the previous year. In the NSE, the trading value has edged up marginally by 1.9 per cent to Rs 3,18,507 crore during the tenure. However, even in the NSE, if one looks at the last four months horizon the trading value has dropped by 4.9 per cent.

Two important reasons can be attributed to this. First, drop in the stock prices appears to have contributed to the drop in turnover value. For instance, the 50-stock Index, S&P CNX Nifty, in the last 6 months ending 30th of April has dropped marginally by 1.8 per cent.

However, if one looks at the immediate four-month horizon, the index has dropped by a whopping 15.1 per cent. The broad-based 500-stock Index, S&P CNX 500, has also dropped by 10.3 per cent in the last four months, clearly indicating a steep drop in the stock prices.

Second, the drop in the (turnover in terms of volumes) number of shares traded also appears to have contributed to the drop in the trading value. For instance if one looks at the sum traded volumes (sum of the BSE and the NSE volumes) in the last 6 months ending April 2003, the trading volumes have dropped by 4.4 per cent to 2,693 crore shares, from the corresponding prior period. If one looks at each of these bourses individually during this tenure, the trading volumes in the BSE has fallen by a whopping 15.3 per cent to 927 crore shares. However, in the NSE, the volumes edged up marginally by 2.6 per cent to 1766 crore shares.

The number of trades and the quantity of shares exchanged per trade have also come down in both the bourses in the six-month period ending March 2003, when compared to the corresponding prior period.

The delivered value as a per cent of the total turnover value has also increased by 2.5 percentage points between October and March in 2002-03. Given the overall bearish trend that prevailed during this period, it appears that investors are taking a cautious stand by reducing their exposure.

It also appears that the volumes in the NSE continue to gain at the cost of the volumes in the BSE.

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