Date:02/01/2004 URL: http://www.thehindubusinessline.com/2004/01/02/stories/2004010201460500.htm

Back Stock trading interest gathers momentum in '03

G. Madhan

2003 saw a sharp surge in traded value on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

Between January and December, traded value in the NSE rose 47 per cent to Rs 9.1 lakh crore, from that registered in 2002. On the BSE, the value was up 26 per cent to Rs 4.1 lakh crore.

NSE continues to gain market share at the cost of the BSE. In 2003, NSE accounted for 69 per cent of the total traded value, as against 65 per cent recorded in 2002.

Two different halves

The average traded value might have grown at an average of about 36 per cent, but a closer look at the numbers shows a different picture. Till May, trading interest remained lacklustre at both exchanges. Between January and May 2003, the traded value on the NSE declined by four per cent, on a year-on-year basis. On the BSE, the decline was higher at 22 per cent.

Trading value, however, rose steadily subsequently and recorded three-digit growth in the NSE, during September and October. The strong spike in the trading interest post-May to a large extent was due to the buoyancy in the markets. Driven by the sharp increase in FII inflows, the 50-stock index S&P CNX Nifty has surged 87 per cent since end-May 2003. The broad-based S&P CNX 500 has also gained 90 per cent during the same period.

The surge in the traded value is not only because of the bull run in the stock prices, but also due to the sharp increase in trading volumes. The number of shares that were traded on both NSE and BSE, during June-December 2003, rose by over 100 per cent.

The number of stocks that were traded on the exchanges also rose sharply. For instance, on an average 1,752 stocks were traded on the BSE in January 2003. In December 2003, the number stood at 2,190.