These pressures have resulted in a substantial decrease in trading volumes on exchanges, with investors seemingly losing faith in the stock market. Over the past six months, approximately 3.8 million clients have exited the stock market, suggesting that the so-called “lockdown traders” may have encountered the reality of stock market volatility.
Zerodha, a leading online-trading platform, reported a nearly 50% drop in monthly new account openings since January, reflecting a similar trend across the industry.
Data from the NSE (National Stock Exchange) reveals a decline in turnover in the cash market. In January 2023, the turnover stood at Rs 10,20,626 crore, down from Rs 11,60,846 crore in December and Rs 12,01,108 crore in November of the previous year. The average daily turnover in January 2023 was Rs 48,601 crore, compared to Rs 52,766 crore in December and Rs 5,71,96 crore in November 2022.
The trading volume of Demat securities also decreased significantly, with a 40.6% drop in January 2023 to Rs 5,168.47 crore, down from Rs 8,704.49 crore in December 2022. Similarly, the market cap of the cash market on the NSE declined by approximately Rs 12.17 lakh crore to Rs 268.02 lakh crore in January 2023, compared to Rs 280.19 lakh crore previously.
Additionally, BSE data shows a decline in the total turnover of equity, which dropped from Rs 1,18,132.64 crore in September 2022 to Rs 68,103.37 crore in January.
These trends indicate a loss of hope in the markets, suggesting that the adage of “buy in fear and sell in greed” should be adjusted to “buy when people lose hope and sell when people are too optimistic.”
Year-to-date, the Sensex has experienced a decline of nearly 2.8%, while the Nifty 50 has seen an even larger decline of over 4%. Currently, the Sensex is below 59,500, and the Nifty 50 is trading below the 17,500 level.
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