Liquidity in India’s stock markets has increased rapidly. One such indicator is the turnover ratio at the stock markets. The turnover ratio has gone up from 39.7% in 1995-96 to 98.1% in ’04-05, according to an RBI analysis. This ratio indicates how often the investor churns his portfolio of stocks. A 100% turnover means that the investor, on an average, changes all the stocks in his portfolio once a year.
The investor interest in stocks is slowly picking up because of various facilitating measures like easy bank finance. Also, on the fiscal side, the government has rationalised the tax on capital gains, which has added to the investor interest in stocks over the years.
On the supply side, the number of companies opting for the equity route to fund their businesses has also gone up.
Gautam Khetan
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Thats right. Infact, nowadays a lot of retail investor’s money is comming into the stock markets. This can be attributable to many reasons such as easy access to stock markets due to online trading, interest rates falling, a lot many demat accounts being opened in remote areas such as J & K or Arunanchal. The Bouancy in the stock market is more attributed to the Liquidity Factor. Gautam is very right while throwing light on the Liquidity factor which i missed in my article about the Stock Market. Thnks Gautam.
Madhur Khandelia