The average daily turnover in the cash segment of the stock exchanges is showing early signs of revival after falling steadily for the last six months.

Most retail investors stayed away from the market after the sudden sharp fall prompted by the pullout of foreign portfolio investors. However, retail investors are now taking advantage of volatility in the equity market and using the occasional bearish trend to make fresh investments.

The ADT on NSE fell  32 per cent in December to ₹1,03,292 crore, down from ₹1,52,907 crore in July. In fact, the ADT has been steadily falling ever since July but recovered marginally by two per cent to ₹1,03,292 in December, up from  ₹1,00,853 crore logged November.

Similarly, the ADT on BSE was down 43 per cent in December to ₹6,758 crore, compared to t ₹11,947 crore logged in July. However, sequentially, it was up 7 per cent in December compared to ₹Rs 6,330 crore in November.

Swapnil Aggarwal, Director, VSRK Capital said the steady decline in equity cash market turnover can be attributed to several factors, including increased market volatility and regulatory changes in the derivatives market, which have influenced investor sentiment.

SIP inflows rise

The consistent rise in SIP inflows indicates a growing preference for mutual funds, as investors increasingly choose professionally managed funds over direct market participation, he said.

This shift could be viewed as a positive trend, as it reflects retail investors’ inclination toward disciplined, long-term wealth creation strategies rather than speculative trading, he added.

Foreign investors consistently book profits in the secondary market and investing in primary market. FPIs have sold ₹1.19 lakh crore of their equity investments so far this year. They have invested ₹17,331 crore through the primary market in the last 27 days alone.

However, the propensity of FPIs selling has slowed down in December compared to the previous two months.

Sriram BKR, Senior Investment Strategist, Geojit Financial Services said turnover on stock exchanges usually spikes alongside positive rallies and tapers during times of fall or higher volatility.

Retail participation was largely seen in the mid-, small- and micro-cap universe, and even that evaporated in October and November, he said.

Interestingly, he added that during the same period MF inflows were steady, suggesting that some investors might have turned to MFs instead of investing in stocks directly.