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Sudhanshu Ranade

Average daily turnover in first 17 days of '07 was Rs 3,765 cr against Rs 4,573 cr last year

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Chennai Jan. 25

Trade in Sensex stocks this year is but a pale shadow of what it was last year.

Average daily turnover of Sensex stocks in the first 17 working days of 2007 (in both the BSE and NSE) was only Rs 3,765 crore, as compared to Rs 4,573 crore in the first 17 working days of 2006.

Since, Sensex has risen a great deal, from an average of 9467 to an average of 14818, turnover would normally have risen, simply because stocks are now trading much above their values a year ago. The answer is that the quantity of stocks traded each day has also fallen, from 75 to 61 million.

Recap

Sensex began the year 2006 at 9390. On February 7, 2006 it crossed 10000, zoomed past 11000 on March 27 and nosed past 12000 on April 20. Daily turnover in Sensex stocks increased rapidly, reaching a record of Rs 6,629 crore in April 2006.

This record has not yet been surpassed. Given the current volumes, it may be a long time before such levels are recorded again. The rise in turnover was accompanied by an increase in the number of shares traded from 75 million in January to 110 million in April.

The steady and yet rapid upward march of Sensex was sharply checked by a single-day fall of 463 points on May 15, followed by a 826 drop three days later. Remarkably, this shock accelerated rather than braking transactions in Sensex stocks.

Turnovers

From the beginning of May 2006 to May 12, 2006, the working day immediately preceding the first fall, turnover averaged at Rs 5,384 crore. Daily turnover for the rest of May was Rs 5,995 crore. Quantity traded increased from 94 to 119 million per day. In June, Sensex went up twice, almost as sharply as it had fallen earlier. It rose 515 points on June 9, 2006, and 426 points on June 15.

Oddly, these upward jerks accomplished what the downward ones had failed to do. Daily turnover in June, Rs 5,599 crore before the first jerk, dropped to Rs 4,489 crore for the rest of the month. Quantity traded fell from 117 to 89 million. Though, Sensex resumed its upward movement soon after (more slowly this time, and more steadily), the damage had been done.

It crossed 14000 on January 12, 2007. But the market had lost its sheen. Daily turnover, at Rs 3,765 crore, is much below its 12-month high of Rs 6,629 crore in April 2006. As for quantity traded, the current 61 million is only a little more than half the 110 million reached in April.

Average daily turnover in Sensex stocks for 2006 fell to Rs 4,408 crore, while only 79 million shares changed hands on the average day.

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