Investor activity on the National Stock Exchange (NSE) weakened in August, with participation declining across key segments and the pace of new registrations slowing, reflecting the impact of weak market sentiment and regulatory curbs.
According to the NSE’s latest Market Pulse report, the number of individuals trading in the cash market fell for the first time in five months to about 1.07 crore in August, from 1.27 crore in July, and a peak of 1.57 crore in September last year.
A similar trend was visible in equity derivatives, where the number of individual traders slipped to 31.9 lakh in August, down from 33.4 lakh in July and far below the June 2024 peak of 52.6 lakh.
SEBI curbs
The decline has been steady since the Securities and Exchange Board of India tightened rules in November 2024, raising margins, contract sizes and expiry restrictions to safeguard small investors amid weak market sentiment.
Turnover also showed signs of stress. Equity cash turnover dropped 19 percent m-o-m to a 21-month low of Rs17.8 lakh crore, while derivatives activity softened, with futures and options premiums slipping to multi-month lows.
This was due to a decline in the less than Rs1 lakh turnover bracket as per regulatory curbs.
“Around 78 per cent of derivative traders over the past year also traded in cash equities, while just 20 lakh investors — barely 1.8 per cent of the base — traded exclusively in derivatives,” the report said.
Investor base
The pace of expanding the investor base moderated. NSE’s registered investors rose to 11.9 crore at end-August, inching closer to the 12-crore mark. But only 12.3 lakh new investors were added during the month, down 18.3 percent from July.