Turnover at all-time high of Rs 5 lakh crore
Nov 01 2013 , Mumbai
The bellwether stock index Sensex peaked at a new high 21,164.52 on Thursday, though it missed the all-time intraday high, clocked in January 2008, by a whisker.
The main highlight on Thursday’s trading was the record turnover of over Rs 5 lakh crore, largely driven by transactions in the derivatives market, which on the expiry day saw (the longest one-month derivatives that closed after one month and three days) investors unwind their positions or carryover the trades into the November series.
The notional turnover for derivatives on the NSE was around Rs 2,43,191.57 crore, while the BSE’s derivatives segment saw a turnover of Rs 2,06,143 crore. However, cash transactions were only around Rs 16,159 crore on the NSE, while on the BSE cash transactions stood at measly Rs 2,534 crore.
Market experts said the numbers showed that the rally was mostly speculative and led by futures & options (F&O) transactions.
The rally on the stock market was led by the banking index where the stocks were traded aggressively after the PSU banks started to report good results. Most banking stocks were higher on average by 10 per cent. The banking index has a weightage of 20 per cent on the BSE Sensex.
The policy initiatives by RBI chief Raghuram Rajan has put to rest investor concerns by reducing the minimum standing facility rates and helping banks to perform on the market, believe experts.
Banking stocks were some of the biggest gainers on the BSE, with Bank of India closing more than 21 per cent up, Indian Bank and Allahabad Bank were also up by around 13 per cent each and Dena Bank was up by 6 per cent.
ICICI Bank has given a monthly return of 26.85 per cent in last one month.
A K Prabhakar, independent analyst and market expert believes there is vast difference between the rally of 2008 and the present one. In 2008, the price to earnings ratio of Nifty 50 stocks was around 28, while at present, it is around 18, whereas the price to book ratio in 2008 was 6.5 times. In the current scenario it is around 2.9 times. In the run up to 2008, the economy picked up in 2005 and peaked in 2007-08, when people started buying. However, on Thursday the GDP is in poor shape, reforms will take time to pick up and people are cautious.
There is no euphoria as seen in 2008.
“This is the bottom and the reversal is expected soon. We can expect the stocks to be sustainable, as results have shown this quarter. Some of the sectors that are expected to take this rally forward are metals, where stocks like Tata Steel have done extremely well in the past three months. Capital goods will also pick up once the reforms start showing results,” said Prabhakar.
Satish Menon, ED, Geojit BNP Paribas Financial Services, said it was not time for celebrations yet.
“First, this near all-time high is after six years, which means that the growth in profitability of companies in the last six years has not yet reflected adequately in the prices. Plus, this is the peak of Sensex, whereas most retail investors are still invested in small and midcap stocks, which are still to see the euphoria that the Sensex and Nifty stocks have been witnessing. I hope in the coming period, such effect is rubbed off on the midcap stocks, which will renew the interest of retail clients,” Menon said.