Retail surge propels NSE delivery volumes to six-year high

The National Stock Exchange (NSE), has seen a striking surge in delivery volumes, reaching a six-year high, driven predominantly by increased retail participation.

The trend, which has been steadily rising since June, appears to be fueled by both direct retail investments and inflows via mutual funds. Analysts suggest that this upward trajectory could persist, barring potential global headwinds or unforeseen political developments, such as anti-incumbency factors in the upcoming assembly and national elections.

One of the contributing factors to this surge is the record-high Systematic Investment Plan (SIP) inflows witnessed every month since June. In October alone, SIP inflows reached ₹16,928 crore, a significant increase from ₹14,734 crore in June. The total number of SIP accounts has also seen a substantial rise, reaching 73 million in October compared to 63.6 million in the previous fiscal year (FY23). The cumulative SIP contribution so far in FY24 stands at ₹1.07 trillion, slightly lower than the ₹1.56 trillion recorded in the entirety of FY23.

Retail investors are actively injecting funds into small- and mid-cap stocks, both directly and through mutual funds, contributing significantly to the heightened delivery volumes. Direct retail inflows into the secondary market totaled ₹21,900 crore in the two months leading up to September, following a period of ₹21,400 crore in net sales from April to July.

This trend positions retail investors as net buyers, with a surplus of ₹500 crore during this period. Mutual funds also witnessed substantial net inflows into small- and mid-cap funds, amounting to ₹39,826 crore, in stark contrast to the ₹4,974 crore outflows observed from standalone large-cap funds, as reported by the Association of Mutual Funds in India (Amfi) data.

Market analysts are closely monitoring these developments, considering the potential implications for market dynamics in the coming months. The surge in retail participation, coupled with robust SIP inflows, paints a positive picture for the Indian stock market, suggesting continued resilience unless unforeseen challenges disrupt the current trend. Investors and industry experts will be keeping a keen eye on both domestic and global factors that may influence the trajectory of India’s stock market in the near future.