Mumbai, May 1 India’s stock market activity in April presented a contrasting picture, as strong gains in equities boosted cash market trading, while higher taxes and regulatory tightening weighed on derivatives volumes.
Cash market turnover rose 7 per cent during the month, supported by a sharp rebound in equities after the steep correction seen in March.
Benchmark indices staged their strongest monthly recovery in over a year, with the Sensex climbing 6.9 per cent and the Nifty advancing 7.5 per cent, marking their best performance since December 2023.
This rally came after both indices had plunged more than 11 per cent in March, their worst fall since the pandemic-driven sell-off of March 2020.
The surge in equities also lifted trading activity in the cash segment, where the average daily turnover (ADTV) touched a near two-year high of Rs 1.44 trillion.
Gains were even more pronounced in the broader markets, with the Nifty Midcap 100 rising 13.6 per cent, its best performance since November 2020, and the Nifty Smallcap 100 jumping 18.4 per cent, the highest since May 2014.
In contrast, derivatives trading saw a decline following an increase in the securities transaction tax (STT) from April 1.
The STT on futures was raised to 0.05 per cent from 0.02 per cent, while options tax was increased to 0.15 per cent from 0.1 per cent.
The higher tax burden, along with elevated market volatility and tighter regulations, led to a 6 per cent drop in derivatives turnover.
The average daily turnover in the derivatives segment stood at Rs 486 trillion, nearly 18 per cent lower than the January level of Rs 592 trillion.
Market participants attributed the slowdown to a combination of tax changes, increased volatility, and regulatory measures such as limiting weekly expiries to two days.
Despite the overall decline in derivatives activity, BSE managed to strengthen its position in the segment.
The exchange’s notional market share crossed the 50 per cent mark for the first time. On a notional basis, BSE’s derivatives ADTV stood at Rs 269 trillion, surpassing Rs 217 trillion recorded by the National Stock Exchange of India (NSE).
In terms of premium turnover, BSE held around 31 per cent market share.
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