The combined cash market turnover across the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) increased in April in comparison to the prior month, while derivatives activity saw a marginal decline during the period.
In March, when the US-Iran conflict was at its peak, traders and investors appeared to prefer derivatives for hedging risk and making short-term bets amid high uncertainty. Activity in futures and options (F&O) typically rises during such phases, as sharp market swings create greater opportunities for hedging as well as speculative trades.
As signs of de-escalation emerged in April, some of this defensive positioning seems to have eased, which led to a marginal decline in derivatives turnover.
Higher cash market turnover across the NSE and BSE suggests investors were increasingly willing to invest in underlying shares rather than rely on leveraged instruments. Investors also took advantage of the correction to buy fundamentally strong stocks at attractive valuations.
The total cash market turnover in April rose 12.70 per cent to Rs 28.80 lakh crore, from Rs 25.56 lakh crore in March, according to exchange data.
In the derivatives market, the total notional turnover, including both futures and options contracts of both stocks and indices, declined by 0.94 per cent to Rs 9,719.51 lakh crore from Rs 9,811.70 lakh crore in the prior month.
A more appropriate gauge of derivatives activity is the number of contracts traded. On the NSE, which commands nearly 90 per cent market share, total contracts traded fell 21.82 per cent to 288.91 crore in April from 369.59 crore in March.
Index options premium turnover in April reduced to Rs 11.24 lakh crore, from Rs 16.24 lakh crore.
