The average daily turnover in the cash market segment of equity markets hit almost 22-month high on the back of FOMO (fear of missing out) syndrome of retail investors.
Despite the growing uncertainty, retail investors continue to bet big on equity investment and use every fall in market to pump in more money.
In this back drop, the average daily turnover on NSE hit almost 22-month high of Rs 1.42 lakh crore in May as the market turned highly volatile due to the on-and-off peace talks between the US and Iran.
The ADT last month was up 5 per cent compared to ₹1.35 lakh crore logged in April.
Similarly, the ADT on BSE also hit a near 2 year high at ₹10,596 crore and was up 14 per cent compared to ₹9,323 crore logged in April.
Sorbh Gupta, Head – Equity, Bajaj Finserv Asset Management said the remarkable resilience displayed by retail investors through the market volatility over the last one-and-a-half years reflects a growing sense of maturity among investors, particularly those investing through mutual funds, who are increasingly adopting a disciplined approach rather than reacting to short-term market movements.
Unless there is significant pressure on household cash flows or an episode of extreme market volatility, this trend of staying invested is likely to continue, he said.
Ravi Singh, Chief Research Officer, Master Capital Services said despite ongoing global uncertainty, activity in the cash market has remained surprisingly strong due to growing participation of domestic investors, who are increasingly looking at equities as a long-term wealth creation avenue rather than reacting to every short-term market event.
Looking ahead, volatility inevitable given global developments, interest rate trends, and geopolitical risks. However, the broader shift of household savings towards financial assets suggests that retail participation and cash market volumes are likely to remain on a strong footing over the longer term, said Singh.
The bellwether Sensex danced to the tune of peace treaty being negotiated between US and Iran in the ongoing West Asia war and finally end in red.
Sensex plunged three per cent or 2,493 points to close at 74,776 points in May while Nifty was down 2 per cent or 572 points to end at 23,547 points. Nifty oscillated in the broad range of 23,200-24,500 during last month.
Gaurav Bhandari, CEO, Monarch, Networth Capital said while global uncertainties continue to create short-term volatility, domestic investors are increasingly focusing on India’s strong economic fundamentals, robust corporate earnings potential and long-term wealth creation opportunities.
Additionally, the consistent growth in systematic investments and a gradual shift from traditional savings avenues to financial assets have created a strong domestic liquidity base that supports market participation, he added.
While market corrections and global events may lead to temporary fluctuations in trading activity, retail investors today are better informed and more disciplined than before, he said.