Indian Cash Market Turnover Sees 38% Growth in FY25, Down from 51.6% in Previous Fiscal

Cash market turnover on Indian exchanges rose 38.3% YoY in FY25 to Rs 300 lakh crore, compared to 51.6% growth in the previous fiscal. The all-India market capitalization expanded 6.9% to Rs 414 lakh crore, ranking fifth globally. Experts attribute the growth to strong earning reports and lower PE ratios. Reducing Securities Transaction Tax (STT) and lowering margins are expected to further boost turnover.

India's cash market turnover rose 38.3% year-on-year (YoY) in the fiscal year ended March 31, 2025, reaching Rs 300 lakh crore [1]. This growth, while significant, marks a slowdown from the previous fiscal year's 51.6% increase. The all-India market capitalization expanded by 6.9% to Rs 414 lakh crore, placing India fifth globally [1].

The growth in cash market turnover can be attributed to several factors. Strong earning reports from companies have attracted more investors, leading to higher turnover in specific stocks and the broader market. Additionally, the trailing Price-to-Earnings (PE) ratios for the Nifty 50 fell to 21.4 at the end of March 2025, from 22.9 at the end of 2023-24, making stocks more attractive [1].

Experts have suggested that reducing the Securities Transaction Tax (STT) and lowering margins in the cash segment could further boost turnover. Mrugank M Paranjape, chairperson of the IMC Task Force on Capital Markets and Managing Partner at MCQube, noted that while a 38% growth is good, India should strive for more growth as capital raise is the primary function of secondary markets [1]. Kamlesh Shroff, MD at Omniscient Securities, also agreed that lowering STT would be beneficial, expecting a rise in turnover this year as futures and options (F&O) volumes shift to the cash market [1].

The index options premium turnover growth also slowed in FY25 to 10.5% from 30.6% in the previous fiscal and 87.5% in the year before it. The National Stock Exchange (NSE) saw a 2% YoY drop in its turnover to Rs 136 lakh crore, while the Bombay Stock Exchange (BSE) experienced an increase in its average monthly premium turnover to Rs 2.3 lakh crore in the last four months from Rs 1.6 lakh crore in the first eight months [1].

The impact of the 25% tariffs on Indian goods due to the country's purchase of Russian oil has been highlighted by Crisil. These tariffs could render exports to the US "unviable," impacting sectors like diamond polishing, shrimp, and home textiles [2]. The extent of the impact will vary depending on each sector's exposure, ability to pass on incremental costs, and relative tariff disadvantage versus competing nations [2]. The US accounts for a fifth of India's merchandise exports and 2% of the overall GDP, making the situation critical [2].

MSCI has announced that it will add four Indian stocks, including Swiggy and Vishal Mega Mart, to its flagship MSCI Global Standard index, setting them up for potential total inflows of $1 billion [3]. This move is expected to bring in significant passive fund flows for these companies, potentially boosting their liquidity and market capitalization.

In conclusion, the cash market turnover in India has shown robust growth, driven by strong earnings and favorable PE ratios. However, the impact of the US tariffs and the need for further regulatory reforms to boost turnover remain critical areas of focus.

References:
[1] https://www.financialexpress.com/market/cash-market-turnover-rises-38-in-fy25-3944854/
[2] https://economictimes.indiatimes.com/news/economy/foreign-trade/tariffs-to-make-exporting-to-us-unviable-for-india-inc-crisil-ratings/articleshow/123263482.cms
[3] https://www.tradingview.com/news/reuters.com,2025:newsml_L4N3U00KW:0-msci-to-add-swiggy-3-other-indian-stocks-to-flagship-index-reduce-eternal-s-weight/