While the United States has a turnover speed of 148%, China and Canada’s ratio stood at 283% and 82%, respectively. Similarly, at 68%, Germany ranks fifth in billing speed. Turnover speed is the relationship between the spot market turnover of domestic stocks and their market capitalization.
With a market capitalization of $5.5 trillion, India ranks fourth after the United States, China and Japan. In comparison, South Korea has a market capitalization of $1.8 trillion, while Canada ranked sixth with a market capitalization of $3.3 trillion.
Despite higher retail share, India continues to have lower turnover velocity due to high concerted trade and significantly higher promoter share. For example, on Thursday (October 17), the total turnover of companies listed on the NSE stood at nearly Rs 1 lakh crore.
Of this, more than a quarter of the turnover came from a handful of 17 stocks, including Bajaj Auto, Reliance Industries, Mphasis, Infosys, BSE, State Bank of India and others.
However, analysts at JM Financial believe that a marginal improvement in turnover speed can significantly increase stock turnover. “Turn speed typically increases significantly as the market matures and NSE is ideally placed to capitalize on the consequent increase in volume,” the national brokerage wrote in a note.
Furthermore, a shift of household savings into capital markets will also drive the volume of changes. Currently, around 70% of household savings reside in physical assets such as gold and real estate. As a result, the share of financial assets in total savings is abysmally low compared to other developed countries.
Stock market turnover indicates how much trading activity took place on a given business day in the market as a whole or in individual stocks. Stocks with higher turnover enjoy better liquidity in the market.
(Edited by: Akanksha Upadhyay)
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