News

Spot market activity on the National Stock Exchange has come down to the lowest level in nearly two years, indicative of weak investor participation despite benchmark indices hovering near record levels.

Data shows the average daily turnover in December 2025 at Rs 90,076 crore, the weakest since early 2024. This compares with Rs 1,04,576 crore in November and over Rs 1.13 lakh crore in June, underlining a steady decline in trading intensity over recent months.

The drop in activity comes even as the Nifty 50 and Sensex touched fresh record highs on December 1, pointing to a widening gap between headline index performance and underlying market participation.

Market participants say persistent underperformance in the broader market has been a key drag on turnover. Over the past month, the Nifty Midcap 100 has declined 2.8 per cent, while the Nifty Smallcap 100 has fallen 6 per cent, compared with a marginal 0.7 per cent drop in the Nifty 50.

The divergence is more pronounced over longer periods. On a one-year basis, the benchmark index is up around 6 per cent, while midcaps have delivered muted returns and smallcaps are down more than 11 per cent, discouraging short-term trading and reducing churn.

Lower risk appetite among retail investors has further weighed on cash-market volumes. Industry estimates suggest retail trading volumes have fallen by about 20 per cent, as repeated losses and volatile price action have led many participants to scale back activity.

Traders said several active retail accounts that drove volumes during earlier market rallies are now either trading selectively or remaining on the sidelines.

At the same time, investment flows have not dried up entirely. Systematic investment plan (SIP) inflows remain strong, indicating that investors are increasingly favouring long-term allocations over frequent secondary-market trades, despite a marginal dip in SIP collections in November.

IPOs draw liquidity away from secondary market

The primary market has also absorbed investor attention. A steady pipeline of IPOs and the prospect of listing gains have pulled liquidity away from the secondary market, particularly from retail investors, dealers said.

Sentiment has also been affected by market-related disruptions that hurt retail confidence. Estimates suggest retail investors could bear losses of up to Rs 55,000 crore in FY24, prompting a more cautious approach to risk-taking.

Market participants said a meaningful recovery in turnover would likely depend on broader market participation improving and volatility easing. Until then, trading activity may remain subdued, even if benchmark indices continue to hold near their peaks.