Indian exchanges - Volatility aiding volume growth in Mar'22 - ICICI Securities

Posted On : 2022-03-14 10:21:02( TIMEZONE : IST )

Indian exchanges - Volatility aiding volume growth in Mar'22 - ICICI Securities

Indian equity markets continued to witness heightened volatility in Feb'22. FPI selling intensified during the month, leading to a decline of 5-10% for broader indices. Drop in market levels impacted cash volumes (down 9% MoM), but higher volatility increased derivatives/commodity volumes by 11%/13% MoM. However, all segments continue exhibiting positive trends in Mar'22 thus far.

  • Mar'22-TD has seen sharp sequential volume growth across segments: Data up to 11th Mar'22 indicates sharp growth in volumes across segments as cash volumes are up 18% MoM, NSE equity derivatives volumes up 2% MoM, and MCX adjusted ADTV (futures + options) up by a strong 57% to Rs477bn.
  • Equity cash ADTV dropped in Feb'22, but improvement is seen in Mar'22-TD: In Feb'22, NSE's ADTV dipped 9% MoM to Rs584bn, but has recovered to Rs691bn. Mar'22-TD ADTV is currently higher than Apr'21-Feb'22 average ADTV of Rs671bn. BSE's Dec'21 cash ADTV declined 10% MoM to Rs48bn and has improved to Rs53bn in Mar'22-TD. NSE's cash segment market share was 92.4% in Feb'22 and improved to 92.9% in the current month till date.
  • Equity derivatives' ADTV boosted by spike in volatility. NSE options ADTV grew 11% MoM in Feb'22 and 2% MoM in Mar'22-TD. India VIX was up 42% MoM in Feb'22 and has remained elevated in Mar'22-TD though it has dipped by 11% in the current month thus far. NSE's total equity derivatives' ADTV in Feb'22 came in at Rs100trn (notional turnover) split between 11%/4% growth in options/futures. BSE options declined 5% MoM to Rs2.1trn in Feb'22.
  • Commodity derivatives: Volatility aided volume growth for MCX: MCX witnessed a large spike in its adjusted ADTV (futures + future equivalent option volumes) as volatility (especially in crude) increased in the wake of geopolitical concerns. MCX futures' daily traded value clocked Rs516bn on 24th Feb'22 (second-highest since 9th Nov'20). Feb/Mar'22 futures ADTV was Rs253bn/410bn, up 13%/62% MoM, while adjusted ADTV stood at Rs305bn/477bn in Feb/Mar'22, up 18%/57% MoM. We expect 15% QoQ EBITDA growth for MCX in Q4FY22 on current trends.

    NCDEX volumes remain weak with 6% MoM decline in its ADTV in Feb'22. Compared to Rs307bn adjusted ADTV for MCX, NCDEX Feb'22 ADTV was Rs12bn.
  • Currency derivatives: Volumes improved sequentially: In Feb'22, NSE/BSE currency derivatives' ADTV grew 28%/12% MoM with 81% market share for NSE.
  • MF trading: BSE maintains market share in terms of number of orders processed: Number of orders processed on BSE/NSE MF platforms grew 98%/54% YoY to 18.1mn/3.1mn respectively, in Feb'22. This implies 86% market share in the number of orders processed and 67% in terms of value in Feb'22 for BSE.
  • Depositories and NSE active clients: CDSL demat accounts grew 3.9% to 60.7mn while NSDL demat accounts grew 2.3% to 26mn in Feb'22. NSE active clients increased 2% MoM to 340mn.

Source : Equity Bulls


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