Retail participation declined as people diverted funds to realty, gold ETF in 2010.
The highly volatile stock market made traders and investors wary of returns in 2010. Though Sensex and Nifty rose by around 18% to 20% in the last calendar year, the total turnover of BSE and NSE from Ahmedabad fell by 21%.
According to experts, the retail participation in the market is declining day by day as people have started investing in gold and real estate. Many scrips which had ended up by over 80% in 2009 failed to generate much enthusiasm among investors in 2010.
All India, the turnover volume of BSE and NSE fell by 5% from Rs47,28,121 crore in 2009 to Rs44,66,221 crore in 2010.
But in Ahmedabad, the turnover of both the bourses witnessed a steep fall of 21% from Rs3,42,465 crore in 2009 to Rs2,69,024 crore in 2010.
Among the top cities, only in Mumbai the volume increased marginally. In other cities, it witnessed a downward trend. Delhi, Ahmedabad and Cochin witnessed the highest fall of over 20% in total turnover of the two stock exchanges. This pushed Ahmedabad to fourth place from the third place which was taken by Kolkata.
Also in 2010, the average daily turnover of Ahmedabad slipped to Rs1,063 crore in from Rs1,409 crore in 2009, a decrease by Rs346 crore. Delhi also witnessed a fall of 25% with the daily turnover coming down to Rs1,898 crore against Rs2,537 crore in 2009. Kolkata climbed up to third position despite registering a fall of Rs278 crore in its daily turnover.
Its daily turnover slipped to Rs1,107 crore from Rs1,385 crore in 2009 -a fall of 20%. Explaining why the turnover fell in Ahmedbad, experts say people in the city are more inclined to invest in small-cap and mid-cap scrips rather than frontline stocks.
“Though the bourses showed a good rise in 2010, the major recovery took place in the frontline stocks. As small-cap and mid-cap stocks did not perform to the expected level, the retail participation reduced to a large extent,” said Mahendra Prajapati, of India Infoline Ltd.
The BSE benchmark Sensex registered a 17% jump to reach 20,509 in 2010 as compared to 17,464 in 2009. But the total turnover of BSE and NSE saw a slump of 5%. The turnover at BSE and NSE had seen a rise from 2005 till 2009. Experts believe that after the upward trend for five consecutive years, volatility in the market is a reason for the fall in turnover.
“After the sub-prime crises, it was India which was relatively less impacted bringing in more investments in the country. But I feel 2010 has been a year of growth for almost everyone. Therefore, diversification is seen in investments in the country,” said Partha Gupta, financial planner, Investment Idea Financial Services.
Vijay Popat, regional director of Angel Broking Ltd, said: “2010 has witnessed an investment shift to gold and real estate from stock markets. Also many Amdavadis have withdrawn their investments from stock market and invested in their own business owing to increased capital requirements and increased returns.”
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