Futures and Options' turnover plummets to 2 year low, Sensex slips 33 points

MUMBAI: Futures and Options’ turnover on the National Stock Exchange fell to a two-year low on Thursday partly due to scant trader participation as indices traded in a narrow range. Analysts said a holiday in some states for Raksha Bandhan also contributed to the lower trader participation.

Equity derivatives turnover on the NSE fell to Rs 55,596 crore on Thursday, the worst since July 5, 2010 when the segment clocked a turnover of Rs 35,804 crore.

“There is no large movement in the Nifty index, which is affecting volumes in the futures contracts. There are also few arbitrage opportunities now as spreads have reduced to 60-70 basis points,” said Aadil Sethna, head — derivatives at Dolat Capital.

The average daily turnover in the F&O segment of the NSE in July 2012 was Rs 1,11,504 crore, down 11% from June 2012 and 14% from 2011. Total cash market turnover on BSE and NSE too declined 21% to Rs 9,101 crore on Thursday from Rs 11,582 in July.

Benchmark indices ended their four-day losing run on Thursday on weak global cues and profit sales. The Sensex ended 33 points lower to 17,224 while Nifty declined 12.75 points to 5227.75. Foreign institutional investors net bought equity worth of Rs 140 crore on Thursday, according to the BSE provisional numbers.

Lack of meaningful action on either side of the Atlantic could dent demand for global risk assets at a time when investors in India remain troubled by signs of weak rainfalls during the monsoon season.

Rains remained below average in the week to August 1, the weather office said on Thursday, extending worries about food inflation and lower rural consumption.

“By now it is pretty clear that overall monsoon is way below normal, and definitely this will put further pressure on our domestic macros,” said Kaushik Dani, a fund manager at Peerless Mutual Fund.

“Going forward, the focus is now on how industrial growth numbers are coming and how inflation will plan up,” he said.

Barring Japan’s Nikkei, most of the Asian indices ended in the red. European markets were down 1% to 2% at the time of going to press on Tuesday after the European Central Bank disappointed investors by keeping the interest rates unchanged.

Among decliners on Thursday, Reliance Industries fell 1%, after shares of the energy conglomerate rallied 5.2% over the previous four sessions, trumping the gains in the broader indexes.

State Bank of India fell 1.1% after the country’s biggest lender cut auto loans to 10.75% from 11.25%, while cutting home loans to a range of 10.25% to 10.4% for new borrowers.