When Nifty 50 slides, this ETF records highest volume in 20 years

When the Nifty 50 on the NSE closed at its lowest levels since August 23 on December 20, exchange traded fund (ETF) Nifty BeES recorded the highest volume in its 20-year history at Rs 205 crore.

Nifty BeES is an ETF, managed by Nippon India Asset Management, which is benchmarked against Nifty 50 Total Return Index. The underlying portfolio of the fund replicates that of the Nifty 50 index.

Following the crash on December 20, Nifty BeES witnessed 88,117 trades, with 75 percent of the volume marked for delivery. Total Nifty50 ETF volume, at the same time, stood at Rs 281 crore, with the balance coming from ETFs like HDFC, SBI and ICICI, The Economic Times reported.

NSE Nifty fell 371 points or 2.18 percent to 16,614.20 on December 20 amid worries over the spread of the Omicron variant of COVID-19. The 30-share benchmark index Sensex declined 1189.73 points, or 2.09 percent, to 55,822.01 the same day.

The current trough is also a result of FII selloffs triggered by the hawkish policy of the world central banks, Vinod Nair, Head of Research at Geojit Financial Services, told The Economic Times after the market close on December 20. FIIs have adopted a cautious view on the Indian market due to high valuation compared to peers, he said.

“The selling in Nifty 50 and BSE Sensex may continue till 16300-16000 and 54800-54500, respectively, in the near-term,” Ravi Singh, Head of Research at ShareIndia Securities, told Financial Express Online.

Between January 1 and December 20, the Nifty BeES ETF had traded an average volume of Rs 29.21 crore buoyed by the simplicity of the product, low expense ratio, and new traders joining the market post the pandemic.

Investors tend to buy a basket of stocks through a broad index ETF like the Nifty, instead of individual stocks, when the markets witness a big correction, Hemen Bhatia, Deputy Head (ETF) at Nippon India Life Asset Management, told The Economic Times. This is because investors are not sure which stock will bounce back, he said.

The rapid rise in demat accounts is leading to a steady rise in ETF investors, with Nippon Life India AMC adding 400,000-500,000 ETF investors every month, Bhatia said.