As the Nifty rallied to yet another lifetime high on Thursday of 7,276.4 points, with the Street becoming increasingly confident the BJP-led NDA will deliver growth, the combined average daily delivery turnover on the bourses in May has touched a three-and-a-half-year high of R8,940 crore.
According to data from Bloomberg, only in two months in the last three-and-a-half years has the turnover has crossed the R8,000 mark, first in November 2010 when it hit R9,310 crore and later in May 2014 when it was R8,940 crore. Higher delivery volumes indicate investors are comfortable taking risks for a longer period.
The average daily delivery turnover so far in May is up 21.26% over that in April. Since the start of the year, turnover has risen by more than 50% and from its lows of R4,408 crore in December 2011 (in the last three-and-a-half years).
“Post the BJP’s performance in the elections, investors are taking more risk and seem willing to do delivery-based transactions in stocks which are not listed in the F&O (futures and options) segment,” Rikesh Parikh, vice-president, Motilal Oswal Securities, observed.
Parikh believes sizeable buying by foreign institutional investors (FIIs) may have also contributed to the increase in delivery volumes. FIIs have bought more than $2 billion worth of equities in May alone.
Market watchers feel volumes are poised to increase further with more investors participating in the market and those already invested churning their portfolios. “Given we are in a bull market, both cash and delivery volumes are likely to go up further,” Gaurav Mehta, vice-president, institutional equities, Ambit Capital said.
High beta sectors such as realty, metals, power, capital goods and banks have been outperforming the markets in May.
The BSE Realty (38.61%), BSE Capital Goods (19.35%), BSE Power (30.84%), BSE Bankex (17.22%) and BSE Metals (23.03%) indices have outperformed the benchmark Sensex, which has gained 8.72% in May.
High beta names such as Unitech, which has a beta of 2.43, has gained more than 78.12% in May. Among other high beta names, DLF (50.34%), Lanco Infra (82.17%), the construction company NCC (55.30%) and Suzlon Energy (67.40%) have been major gainers.