BSE derivative trading volume nears Rs1 lakh crore

In just one day, BSE's trading volume in derivatives increased by Rs24,625.2 crore to reach near Rs1 lakh crore. But dealers seem baffled with this humungous number put out because retail trades is still overwhelmingly done in National Stock Exchange

Even as the third exchange is about to enter the fray, the equity derivative market which was almost entirely monopolised by the National Stock Exchange (NSE) until a few months ago, is witnessing serious competition from the BSE (formerly Bombay Stock Exchange).


After the exit of Madhu Kannan, its managing director and chief executive, the BSE has reached new heights in derivative trading volumes. As of Tuesday, its trading volume in derivative segment comes at Rs98,276.27 crore from Rs73,651.10 recorded yesterday. This is a whopping increase of Rs24,625.2 crore in just one day! The quality of this trading volume is not yet clear. What is however, is evident is that this segment has been kick started under Ashish Chauhan, its acting CEO, who was part of the original team that set up the NSE over a decade ago. He was also the first member of that team to quit NSE.


Just few days ago, NSE had a 100% market share, which is now down to 61% (its total turnover as of today is Rs1.51 lakh crore) and in just another month, when the MCX Stock Exchange (MCX-SX) start its equity trading business, there would be serious competition among the bourses. With BSE, the oldest among all bourses, showing huge increase in trading volumes, it will not be a smooth riding for MCX-SX, as anticipated.


According to a release by the Exchange, on Tuesday, there were 39.9 lakh contracts traded and the number of trades were about 1.9 lakh with a turnover of Rs98,276.27 crore compared with 28.5 lakh contracts and 1.5 lakh trades with a turnover of Rs73.651.1 crore yesterday.

Interestingly, BSE said that in the futures segment (current month) it's turnover is Rs757.3 crore compared with NSE's Rs8,141.43 crore day. BSE's market share in this segment comes to only about 8.5%. However, in Options (current month), BSE said it commands a market share of 52.7% with a turnover of Rs97.254.93 crore compared with NSE's Rs87,274.1 crore.


BSE’s average daily turnover was around Rs6,400 when Mr Kannan took over in 2009. During the tenure of Mr Kannan, BSE was saddled with a lop-sided pay structure and a deep divide between a tiny and extremely expensive top management team which had little expertise in running markets (far from turning around sinking bourses) and the rest of the staff.


After Mr Kannan left, BSE is being run by Mr Chauhan, who interestingly was one of the five top managers of NSE way back in the mid-90s. It remains to be seen how he has engineered such sudden massive jump in volumes. After all, even today, dealers report that the bulk of the orders for options in NSE.



Rajkumar Singh

5 years ago

In fact, I had conveyed through feedback that why such informative news and articles of Moneylife are not made to share like other news or media portals?

If this is done, I am sure many other unknown people would come to know about the painstaking efforts put up by Moneylife in their unique mission to educate the investors.

I hope this message will find its due place!

Kush Katakia

5 years ago

BSE's liquidity enhancement scheme introduced by Mr.Madhu Kannan initially kick started the derivatives volume on the exchange. Gradually, a unscrupulous coterie of broker members have effectively used this platform for huge gains. They are in effect circular trades, with the only intention being to garner lucrative incentives distributed by the BSE.

Kush Katakia

5 years ago

BSE's liquidity enhancement scheme introduced by Mr.Madhu Kannan initially kick started the derivatives volume on the exchange. Gradually, a unscrupulous coterie of broker members have effectively used this platform for huge gains. They are in effect circular trades, with the only intention being to garner lucrative incentives distributed by the BSE.


Debashis Basu

In Reply to Kush Katakia 5 years ago

Need more info. Anybody willing to share? Remember, only Moneylife will dare to write :)

Kush Katakia

In Reply to Debashis Basu 5 years ago

Can i get an email address where i can write confidentially?

Kush Katakia

In Reply to Debashis Basu 5 years ago

Give me a couple of days..Shall surely give you more feedback..

Jindal Steel to buy Canada’s CIC Energy for over Rs600 crore

As per the agreement, CIC will be merged with JSPL's subsidiary, Jindal BVI and its existing shareholders would get CAD 2 per share

New Delhi: Jindal Steel and Power (JSPL) said it entered into a binding merger agreement to acquire Canadian coal firm CIC Energy for Canadian dollar (CAD) 116 million (over Rs600 crore) in an all cash deal, reports PTI.


As per the agreement, CIC will be merged with JSPL's wholly-owned subsidiary, Jindal BVI Ltd and its existing shareholders would get CAD 2 per share for their outstanding shares in the Canadian firm.


“The consideration values the total equity of CIC Energy at approximately CAD 116 million on 58 million shares (including all common shares and excluding all options and all unvested warrants),” the Canadian company said in a filing to the Toronto Stock Exchange (TSX).


Commenting on the deal, CIC's Chairman and CEO Warren Newfield said, “In the current challenging economic and capital markets environment, we believe that this offer provides fair value for CIC Energy shareholders.”


However, a JSPL spokesperson declined to comment on the deal.


The deal would provide the Naveen Jindal-led firm access to CIC's 2.6 billion tonnes of high quality thermal coal in Botswana, which will ensure long-term fuel security to JSPL's power ventures, including that of subsidiary Jindal Power.


Following the announcement, JSPL shares were up 0.76% at Rs417.35 apiece on the BSE in the late afternoon trade.


Stating that its Board has recommended the deal to company shareholders, CIC said that it will convene a meeting of its shareholders on or before 28 August 2012 to consider and approve the merger.


The price offered by JSPL at CAD 2 per share to CIC shareholders is a premium of 65% to the volume-weighted average trading price of the Canadian firm's shares on TSX for last one month.


“The merger agreement provides for an outside date of 9 October 2012 for the completion of the merger,” CIC said, adding that completion of the deal is subject regulatory approvals, including from government of Botswana -- where it operates the coal mine.


Shares of CIC has shot up by over 11% to CAD 1.570 per share on the TSX since 18 July 2012, when the Canadian firm had confirmed that it was in talks with JSPL for selling a controlling stake.


The Canadian firm has a mining-cum-power complex called Mmamabula Energy Complex in Botswana, Africa and its Mmamubala coal field is estimated to hold 2.6 billion tonnes of high thermal coal, mostly above 6,000 kcal/kg of calorific value.


According to the company website, CIC is working to begin production in next 3-4 years and thereafter, it will export up to 24 million tonnes of coal per year from the Mmamabula coal field.


Sensex, Nifty will move sideways to down: Tuesday Closing Report

The market has to rally in the next couple of days or it will sink much lower.

Today the Asian indices had a mixed opening while back home both the Sensex and the Nifty opened in the positive. The Sensex opened at 16,908 while the Nifty opened at 5,129. The market was listless throughout the day. We had mentioned yesterday that if the Nifty closes below today’s low, the next support would be 5,060. We continue to maintain the stance. The National Stock Exchange (NSE) saw a higher volume of 54.82 crore shares


HSBC's Flash China manufacturing purchasing managers index (PMI) rose to 49.5 in July from 48.2 in June, rising close to the 50 level that divides expansion from contraction. The increase was driven by a jump in the output sub-index to 51.2 - the best showing since October 2011.


After Post European markets opened, the domestic indices went into the red, after a report that Germany's manufacturing sector contracted at its fastest pace in three years in July. The Markit PMI index tracking the manufacturing sector slid to 43.3 from 45.0 last month, well under the 50 mark that separates growth from contraction. Both the Sensex and the Nifty hit a lower low of 16,840 and 5,103 respectively. But the indices closed marginally higher, breaking the two day of fall. The Sensex rose 41 points higher (0.24% up) to close at 16,918 while the Nifty rose 10 points (0.20% up) to close at 5129.


On the political front, Sharad Pawar-led Nationalist Congress Party (NCP) deferred its decision on whether to withdraw from the Manmohan Singh government by a couple of days. Congress president Sonia Gandhi also pitched in to help, when she told NCP leader Praful Patel at a tea party in Parliament to “do something” for ending the stalemate. In yet another move to keep the ally onboard, Prime Minister Manmohan Singh named Pawar as the chairman of the coal-mining Group of Ministers despite the party's boycott. Meanwhile, the NCP's Working Committee met at Pawar's residence on Monday to discuss its future strategy. However, Patel said the discussions would continue, and a final decision would be taken “no later than” Wednesday


The concern about the Europe's debt crisis is worsening after Moody's Investors Service cut outlooks for Germany, the Netherlands and Luxembourg to negative.  The Markit preliminary composite purchasing managers index reading for the 17-nation euro zone was unchanged at 46.4 in July, signaling a sixth straight month of shrinking private-sector activity across the region.


The Asian indices had a mixed closing. The European indices and the US Future indices were almost flat at the time of writing.


Back home, the advance-decline ratio on the NSE was negative at 764:902.


Among the broader indices, the BSE Mid-cap index closed 0.16% higher and the BSE Small-cap index rose 0.16%.


Among sectoral indices, the top five gainers were BSE FMCG (up 1.91%); BSE Consumer durable (up 1.16%); BSE Oil & Gas (up 0.84%); BSE Health Care (up 0.36%); BSE PSU (up 0.30%). The losers were BSE Capital goods (down 1.09%); BSE IT (down 0.67%); BSE TecK (down 0.30%); BSE Auto (down 0.11%).


Among the Sensex stocks, the top five gainers were Hindustan Unilever (up 7.50%); Sterlite Industries (up 2.56%); Maruti Suzuki (up 2.34%); Bharti Airtel (up 1.42%); ONGC (up 1.19%). Among the bottom five were, Wipro (down 2.93%); Larsen & Toubro (down 1.45%); Sun Pharmaceutical (down 1.38%); BHEL (down 0.96%) and Mahindra & Mahindra (down 0.90%).


The top two A Group gainers on the BSE were- Hindustan Unilever (up 7.50%) and Tata Global Beverages (up 6.79%). The top two A Group losers on the BSE were- HDIL (down 4.66%) and IRB Infrastructure (down 3.67%).


The top two B Group gainers on the BSE were- India Motor Parts & Accessories  (up 20%) and Cupid (up 19.98%). The top two B Group losers on the BSE were- Yuken India (down 16.13%) and Maestros Mediline Systems (down 11.05%).


The gainers on the Nifty were Hindustan Unilever (up 7.57%); Ranbaxy Laboratories (up 3.03%); Sterlite Industries (up 2.71%); Maruti Suzuki (up 2.23%); Sesa Goa (up 1.66%) while the losers were Wipro (down 3.07%); SAIL (down 2.80%); Larsen & Toubro (down 1.75%); Kotak Mahindra Bank (down 1.48%); Sun Pharmaceutical (down 1.41%).


Wipro today announced that it acquired premium personal care brand Yardley's businesses in the UK and other select European nations for an undisclosed amount. Wipro may also acquire the 'Woods of Windsor' business, another heritage brand in the UK, which is well-known for its floral fragrance led portfolio in personal care segment. Wipro fell 2.93% to close at Rs346 on the BSE.


United Phosphorous informed the stock exchanges that the Competition Appellate Tribunal (COMPAT) had granted a stay against the Competition Commission of India order. However, the company is required to deposit 10% of the penalty amount with the Registrar of COMPAT within eight weeks. The Commission had earlier levied a penalty of Rs 252 crore on United Phosphorous against charges of violations of section 3 (3) (b) [that prohibits agreements that limit production or control of products] and section 3 (3) (d) [that prohibits collusive bidding], of the Competition Act, 2002. The stock rose 1.98% to close at Rs123.90 on the BSE.  


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