Priyanka Tiwari
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Suspense crime, Digital Desk : A strange and potentially worrying trend is emerging in the Indian stock market, signaling that investors may be taking on excessive risk. While the sheer number of shares being traded has skyrocketed, the total value of those trades is lagging significantly behind, and experts are raising red flags.
Imagine a shop where the number of sales is booming, but total revenue isn't keeping pace. The reason? Customers are buying millions of cheap candies instead of a few expensive chocolates. This is precisely what's happening on the stock exchange right now.
Recent data shows that trading volumes on the National Stock Exchange (NSE) surged by an astonishing 40% in June. However, the turnover—the total monetary value of all those trades—grew by a much smaller 17%. This disconnect has pushed the average price of a traded share down to a 10-month low of just ₹268.
This phenomenon is being driven by a massive shift in focus towards low-priced stocks, often called "penny stocks," which are typically found in the small-cap and micro-cap segments of the market. Retail investors, in particular, are piling into these stocks, lured by the potential for quick, explosive gains. The excitement is especially concentrated in sectors that have seen spectacular rallies, such as Public Sector Undertakings (PSUs), defense, and railway-related companies.
While the high activity might seem like a sign of a vibrant market, market analysts view it as a classic sign of "speculative froth." They warn that this behavior is a historical red flag often seen near market peaks. When investors start ignoring large, stable companies in favor of chasing momentum in cheap, often lower-quality stocks, it can indicate that a market correction or downturn is on the horizon.
In essence, the current frenzy suggests that caution is being thrown to the wind. The market's foundation may not be as broad and healthy as the high trading volumes suggest. Instead, it points to a concentrated, high-risk game being played in the riskiest corners of the market, a situation that has historically not ended well for those who join the party late.
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