Elaborating the reason for the increase, SMC Capitals Equity Head Jagannadham Thunuguntla said the key reason could be highly vibrant and liquid F&O segment of NSE. Besides, the recent `cross margining` permitted by SEBI has significantly encouraged traders and arbitrageurs towards NSE. This factor has helped NSE to increase its market share in the cash segment to 74 per cent in 2009.

1. Commodity trading volumes soar amid correction in equity mkt
New Delhi, April 29: With the emergence of a phase of severe correction in the equity market, investors
have shifted their focus to commodities market, pushing commodity trading volumes to form 31 per cent
of the total marketshare in 2009, up from 18 per cent in 2007, says a study.
Till the bull run existed in the equity market, trading volumes were on an uptrend, as in 2006, and
equities had a marketshare of 75 per cent, whereas commodities had 25 per cent marketshare. This trend
further intensified in the bull run of 2007, with equities marketshare going up to 82 percent.
quot;However, since then, on the back of severe correction in equity markets, there was a clear shift in the
trading volumes to commodity markets during 2008 and 2009,quot; domestic brokerage firm SMC Capitals
said in a report.
This is quite an impressive show by the commodity markets despite absence of FII involvement in
commodity markets and lack of `options` market, the report added.
An analysis of trading volumes shows that during 2006, 2007 and 2008, in the `total equities` trading
turnover, the composition of derivatives and cash remained in a stable range of 71 to 73 per cent in
favour of derivatives and 27 to 29 per cent in favour of cash.
However, in 2009, when the market is trying to stage a comeback, it is derivatives segment that has a
clear spurt in activity with 77 per cent marketshare in comparison to 23 per cent of cash segment, and
most of the fresh money flowing into the market is more of `short-term trading` in nature than a `long term
sustainable` one.
Meanwhile, since 2006, there has been a significant increase in trading volumes in MCX. In 2006, MCX
and NCDEX had a marketshare of 62 per cent and 38 per cent, respectively.
However, by 2009, MCX has established its leadership by steadily increasing its marketshare to 91 per
cent, leaving behind NCDEX with only 9 per cent marketshare, largely due to an aggressive expansion of
trading product range by MCX, the report added.
Similarly, in the cash segment, NSE and BSE had a market share of 66 per cent and 34 per cent,
respectively, in 2006. However, NSE has steadily increased its share to 74 per cent, leaving BSE with 26
per cent share so far this year.

2. Elaborating the reason for the increase, SMC Capitals Equity Head Jagannadham Thunuguntla said
the key reason could be highly vibrant and liquid F&O segment of NSE. Besides, the recent `cross
margining` permitted by SEBI has significantly encouraged traders and arbitrageurs towards NSE. This
factor has helped NSE to increase its market share in the cash segment to 74 per cent in 2009.
Bureau Report