Amidst increased volatility in the stock market, there has been a significant decline in daily trading volumes across the cash segment of stock exchanges. The combined average daily turnover in the equity cash segment (BSE + NSE) dropped to a 15-month low of ₹96,600 crore in February 2025, down 5.2% month on month (MoM) from ₹1.02 lakh crore in January 2025. The similar trend was seen in case of options premiums, with the combined premium turnover declining 8.7% MoM to ₹59,400 crore.

The sharp volatility in the equity market also impacted retail participation in the world’s fifth largest equity market as demat account additions plunged to a 21-month low of 2.26 million last month.

“Equity cash and option premium volumes have remained muted over the last 3-4 months which can be attributed to a combination of weak markets and impact of regulatory changes. This is also corroborated with lower number of new demat additions and decrease in active traders,” ICICI Securities said in a latest report.

Similar trend of muted cash and options premium turnover continued in the first two weeks of Mar’25 due to regulatory impact and weakness in equity market. As per the new equity derivatives framework, collection of option premiums upfront from option buyers by trading member/clearing member became mandatory from February 1, 2025. Adding to it, the capital market regulator SEBI has also removed the offsetting benefit for options on expiry days, effective from 1st Feb’25.

Cash volumes decline for 2nd straight month

After showing marginal increase in Dec’24, cash volumes declined for the 2nd consecutive month in Feb’25. The average daily turnover (ADTV) in the equity cash segment of the National Stock Exchange (NSE) decreased 4.7% MoM to ₹91,700 crore (lowest in 15 months), while BSE’s cash ADTV decreased 12.8% MoM to ₹5,000 crore in Feb’25 (lowest in 19 months). The BSE cash ADTV as a percentage of NSE cash ADTV slipped to 5.1% in Feb’25, from 5.6% in Jan’25.

“If we combine both BSE and NSE, Feb’25 cash ADTV was ₹96,600 versus ₹1,64,900 crore in Jun’24 and ₹1,07,200 crore in Nov’24,” ICICI Securities said in its report.  

In first two weeks of this month, cash volumes continued to decline for NSE, while it was stable for BSE. The cash ADTV for NSE fell 5.7% in first two weeks of Mar’25 to ₹86,400 crore while it remained flat at ₹5,000 for BSE.

F&O turnover sees a similar trend

Meanwhile, combined future and option average daily turnover for both exchanges (NSE and BSE) also declined from highs of ₹96,800 crore in Jun’24 to ₹69,200 crore in Nov’24. In Feb’25, the combined premium turnover fell further by 8.7% MoM to ₹59,400 crore. For NSE, options premium ADTV declined by 10.5% to ₹47,900 crore in Feb’25 while it remained stable for BSE at ₹11,500 crore.

In the first two weeks of Mar’25, options ADTV at a systemic level remained stable at ₹59,500 crore. The NSE reported an uptick by 1.4% to ₹48,600 crore while the BSE reported a 4.3% MoM drop to ₹11,000 crore.

Demat additions slip to a 21-month low

For the second consecutive month, aggregate demat account additions remained were below 3 million mark, slipping to 21-month low of 2.26 million in February. The decline in new demat additions has also led to decline in NSE’s monthly active clients by 1.4% MoM in Feb’25 to 48.9 million. CDSL’s Feb’25 market share of total and incremental demat accounts stood at 79% and 91%, respectively.

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