Trading activity in the equity cash segment cooled in June after climbing to a 22-month high in May, as investors turned cautious amid the absence of fresh market triggers. According to reports from Business Standard, average daily turnover (ADTV) in the cash segment across the NSE and BSE declined 7% month-on-month to ₹1.41 trillion in June. The decline followed three consecutive months of gains, marking a significant shift in market sentiment and trading patterns.
In contrast to the cash market decline, average daily turnover in the futures and options (F&O) segment rose 3% month-on-month to ₹500.6 trillion, largely aided by a spike in activity during the month's final expiry sessions. As reported by Business Standard, the apparent surge in headline derivatives turnover masked a softer underlying trend, with F&O activity remaining largely subdued for the better part of June. The late-month spike was driven primarily by heavy concentration of trading volumes during the final week.
Market participants attributed the decline in cash market turnover to sentiment-driven factors rather than structural issues. According to Prakarsh Gagdani, founder of Soaring Peaks Capital, as reported by Business Standard, "The moderation in cash market turnover in June appears to be largely sentiment-driven rather than structural. After a strong improvement over the previous two to three months, especially in the mid-cap segment, the market lacked fresh triggers in June and equities remained under pressure, leading to some profit booking and lower trading activity."
Despite the June decline, market participants maintain a constructive outlook for cash market volumes. Gagdani noted that "with easing crude oil prices and progress in the monsoon, investor participation could improve. These factors should provide fresh triggers for the cash market, and trading volumes are likely to stabilise or recover over the coming weeks." The outlook for derivatives volumes is expected to be influenced by the Reserve Bank of India's revised bank guarantee norms for proprietary trading firms and stockbrokers, with mandated full collateralisation requirements taking effect from July.
