NSE turnover hits 2-year low: Decoding investors shift and FPI activity
Investor confidence in the stock market seems to be waning, leading to NSE equity trading turnover hitting a two-year low in December. Concerns over smallcap and midcap stock returns, coupled with DII absorption of FPI sales, are driving this caution. Retail and HNI investors are exploring alternatives like IPOs, impacting overall market liquidity despite recent record highs.
New Delhi: Investors' interest in the stock market seems to be the weakest in the last two years. Due to the uncertainty about the returns from smallcap and mid-cap stocks, both investors and traders are now alert. This has led to a direct impact on the equity trading turnover of NSE. So far in December, the average daily turnover of the equity segment on the NSE has come down to Rs 90,076 crore. This level is the lowest since November 2023. In comparison, the average turnover was Rs 1,04,576 crore in November and Rs 98,740 crore in October. In November 2023, this figure was around Rs 70615 crore.
Slowness in the market despite record highs
Interestingly, the decline in business came at a time when the Sensex and the Nifty touched an all-time high on 1 December. However, both the indices have come down by about 2 percent after hitting fresh peaks.
DII buying and FPI selling
Kurana says that domestic institutional investors are absorbing the sale of FPI. This is reducing the scope for new purchases in the market and trading volumes are under pressure.
Mid-caps and smallcaps raise anxiety
This year, the Nifty Midcap 150 index is up about 3.9 percent, but it has slipped 1.6 percent in the last one month. At the same time, the Nifty Smallcap 250 index is down 8 percent so far in 2025 and it has declined 4.4 percent in the last one month.
Both retail and HNI retreated
Experts say that along with retail investors and traders, HNIs are also looking for other options. Many investors are turning to the primary market where there is hope of listing gains through IPO. Apart from this, some money can also be shifted to other asset classes.
According to market experts, there is a possibility of FPI being less active during the holiday season. In such a situation, the direction of the market in the near future will be decided on the basis of domestic investors. Trading volumes early next year will depend on how foreign investors return to India.
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