India Capital Market Tracker— Negative Market Sentiments Hurt Activities Across Segments In Feb: Motilal Oswal

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Motilal Oswal Report

In February 2025, daily volumes on exchanges continued to dip with overall average daily turnover declining 4% month-on-month to Rs 289 trillion. Post-implementation of new F&O regulations in Nov’24, total ADTO has declined 44% (F&O ADTO down 45%). Other factors such as weak market performance, unfavorable macro environment, and negative investor sentiments have also contributed to the decline.

Retail participation declined amid F&O regulations and weak market trends. Retail cash ADTO declined 12% MoM to Rs 342 billion while retail future and option premium ADTO declined 6% MoM to Rs 559 billion. 

Commodity notional ADTO achieved a new peak in Feb’25, growing 3% MoM to ~Rs 2.6 trillion, driven by 8% MoM growth in futures to Rs 278 billion and 3% MoM growth in options to Rs 2.3 trillion.

Demat additions were the lowest since May’23 at 2.3m in Feb’25 (2.8 million in Jan’25). Historically, the slowdown in demat additions has occurred during the phase of weak market performance.

Mutual Fund AUM declined ~1% MoM in Feb’25 to Rs 67.6 trillion (up 24% YoY) with equity AUM affected by weak market trends. It dipped 3% MoM to Rs 28.8 trillion. SIP maintained its momentum with Rs 260 billion of inflows in Feb’25 versus Rs 264 billion in Jan’25.

We expect the growth trajectory of capital market players to recover once the market stabilizes and participation across asset classes improves. F&O volumes have now achieved a new base with all regulations kicking in and we expect brokers and exchanges to benefit from the rise in participation in the long term. Mutual fund activity is expected to remain stable, backed by efforts of the industry to spread awareness, enhance financial literacy, and promote a long-term investment perspective.

Our Top picks in the sector are: Angel One, HDFC AMC, and Nuvama.

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