India’s National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) have surpassed the Hong Kong Exchange (HKE) in terms of trading volumes, showcasing their growing dominance in the market. With a one-month average daily turnover (ADTV) of $16.5 billion, compared to HKE’s $13.1 billion, it is evident that India’s stock exchanges are experiencing significant traction.
This achievement comes on the heels of India’s ascent to the fourth-largest equity market in terms of market value just last month. The Nifty Midcap 100 and Nifty Smallcap 100 indices have skyrocketed by 60% and 74% respectively since last year, while the benchmark Nifty 50 index has climbed by 23%.
January saw a remarkable surge in the number of new trading accounts in India, with the industry adding a record-breaking 4.7 million accounts. This surpasses the previous record of 4.1 million set the month before. Furthermore, the ADTV for both the cash and derivatives segments (NSE and BSE combined) reached an astonishing all-time high of Rs. 1.23 trillion and Rs. 460 trillion respectively, on a notional basis.
Ajay Menon, the CEO for broking and distribution at Motilal Oswal Financial Services, predicts that the trading volumes will continue to thrive, indicating a positive outlook for India’s stock market.
While Indian stocks are gaining positive consensus among investors, there seems to be a “low appetite” for Chinese shares. However, it is important to note that the exponential rise in India’s trading values does raise some concerns. The cyclically slow economy may result in earning downgrades, and the banking sector liquidity appears to be tightening. Additionally, as India heads into elections, there is a likelihood of profit-taking, which could impact the market. There is also the possibility of funds being reallocated back to Asian markets like Korea and China.
Overall, India’s stock exchanges have demonstrated their strength and growth potential, but it is crucial to monitor these challenges and adapt accordingly to ensure continued success in the market.
