India surpasses Hong Kong in terms of stock trading volumes
India's National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) have outperformed the Hong Kong Exchange (HKE) in trading volumes. They now have a one-month average daily turnover (ADTV) of $16.5 billion compared to HKE's $13.1 billion. The achievement follows India's rise to the fourth-largest equity market in terms of market value last month. The Nifty Midcap 100 and Nifty Smallcap 100 have soared by 60% and 74% since last year. The benchmark Nifty 50 index went up by 23%.
Indian stock market buzzing with new records
In January, India saw a record number of new trading accounts, with the industry adding 4.7 million new accounts, breaking the previous record of 4.1 million set the month before. The ADTV for cash and derivatives segments (NSE and BSE combined) reached an all-time high of Rs. 1.23 trillion and Rs. 460 trillion (on a notional basis). Ajay Menon, CEO for broking and distribution at Motilal Oswal Financial Services, believes the volumes will continue to remain robust.
Issues with Indian stocks
As per Nomura, there is a growing positive consensus about Indian stocks but there is a 'low appetite' for Chinese shares. However, the exponential rise in India's trading values is a concern. The issues with Indian stocks include cyclical slowdown in the economy which can cause earning downgrades. Also, tighter banking sector liquidity and likely profit-taking as India heads to elections is an issue. Reallocation of flows back to Asian markets like Korea and China is a looming possibility.