How will NSE's 1% reduction on cash equity, derivates transaction charges benefit retail investors?

The National Stock Exchange (NSE) announced that its board has approved a one per cent reduction in overall transaction charges across cash equity and equity derivatives segments and products with effect from April 1, 2024. The domestic stock exchange said the reduction is expected to have an overall impact of around ₹130 crore per annum on the company's revenue from transaction charges.

According to market experts, the NSE's move could potentially drive up volumes, especially at a time when stock markets are hitting record highs driven by foreign capital and economic growth, with high volumes in stock options trading drawing a large number of retail investors.

Also Read: NSE to cut cash, derivatives transaction charges by 1%

‘’This commendable initiative is poised to significantly lower the overall cost of transactions, fostering a more accessible and efficient trading environment. The reduction in transaction charges not only underscores NSE's commitment to enhancing market accessibility but also aligns with the broader goal of promoting investor participation and market liquidity,'' said Narinder Wadhwa, National President at Commodity Participants Association of India (CPAI).

‘’By making transactions more cost-effective, NSE has taken a significant step towards empowering investors and market participants across the nation. We applaud NSE for its proactive approach in addressing the needs of market stakeholders and for its relentless efforts towards fostering a robust and dynamic securities market in India,'' added Wadhwa.

Currently, NSE's transaction charges for the equity segment are placed at 0.00325 per cent, and for the derivatives futures segment it is fixed at 0.0019 per cent, For options, the rate stands at 0.05 per cent. Meanwhile, the Bombay Stock Exchange's (BSE) charges for equities are at 0.00375 per cent.

Stock Markets Today

Nifty 50 and Sensex managed to end on Tuesday almost flat while most of their components ended with losses. The domestic market experienced a broad selloff while small- and mid-caps declined on concerns over stretched valuations. The rupee consolidated in a narrow range and settled for the day three paise lower at 82.78 (provisional) against the US dollar.

Most sectoral indices closed in negative territory, reflecting cautious market sentiment. Nifty 50 closed three points up at 22,335.70, while the 30-share Sensex pack index settled 165 points, or 0.22 per cent, higher at 73,667.96 with 22 stocks in the red.  In the broader market, the BSE smallcap gauge droped 2.11 per cent and midcap index was down 1.31 per cent.

Also Read: Smallcap segment can suffer more; time to avoid the sector? Experts weigh in

The BSE Smallcap index is down over five per cent in March so far, following a loss of about a per cent in February, on concerns over inflated valuations. Small- and mid-cap stocks have lost about seven per cent and two per cent respectively since capital markets regulator Securities and Exchange Board of India (SEBI) sought more disclosures on February 27, compared to a 0.6 per cent rise in Nifty 50.

“Buying in select frontline stocks helped key benchmarks to end in positive territory in a volatile trading session, although markets witnessed broad-based selling, especially in realty, power and capital goods stocks. The focus is on the inflation readings to be released in the US and India, as any further moderation would improve the prospects of a rate cut by the Fed. Technically, with an intermonth perspective, all bullish eyes will be on Nifty's 23,000 mark,'' said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.