NSE cash volumes sink to six-month low ahead of Sebi’s F&O curbs

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Subscribe to enjoy similar stories. Mumbai: A combination of regulatory tightening and nervousness due to the recent pullback in equities has dragged down turnover in the cash market and the number of trades on NSE to a six-month low, per market veterans. The average daily turnover on NSE, which commands a 94% market share, declined almost 12% sequentially to ₹1.07 trillion in the month through 28 October from the previous month.

This is the lowest since April’s average daily turnover of ₹1.06 trillion. The number of trades also fell to its lowest in six months, at 734.3 million in October. In April, it stood at 681 million.

Also, the number of dematerialised securities traded in October has dropped to 67.9 billion, the lowest since June 2023’s 63.39 billion. “There is some rationalisation in the cash market volume ahead of the Sebi tightening in the derivatives segment effective next month," said Deepak Shenoy, founder, Capitalmind, a portfolio management service provider. The Securities and Exchange Board of India has approved six proposals to strengthen the derivatives (futures and options, or F&O) framework and enhance investor protection.

Three of those will become effective on 20 November. Also read |Sebi’s crackdown seen cooling India’s options frenzy even as regulator’s guard rails go up Investors hedging their cash positions with derivatives or doing arbitrage are not initiating too many fresh trades (in the underlying cash and derivatives segments), as lot sizes, extreme loss margins to cover unforeseen risks, and the number of weekly expiries are being rationalised next month. Shenoy termed the recent pullback in the market, the longest in a year-and-half, as “par for the course".