Highest monthly return in April 2020; volumes remain low

The markets during April 2020 have seen a smart recovery with double digit average returns for BSE listed stocks. However, it came with a word of caution, which is depicted by low volumes.

The average trading volume for April (as of April 28) stood at 16.06 lakh shares. This is nearly half of the average trading volume during March 2020, where the figure stood at 30.54 lakh shares for a month. During this month, the spread of Coronavirus was still in its early days. After the announcement of corporate tax cut in September last year, the markets have seen a gradual rise in monthly trading volumes. From 18.43 lakh shares, the average volume reached 24.6 lakh shares from September to February.

On the return front, though, April stood as a standout performer. Since the last year’s interim budget, the market sentiment has been very weak. The FPI taxation, low top line growth, slain macro-economic numbers has weighed high on market. Overall, in the second half of 2019, we did not see even a single month which had average monthly returns in double digit. The trend though has changed in April 2020, where the average gains of BSE listed companies stood at 13.38 per cent. While that in March, the average returns stood at a negative of 23 per cent. April month returns also stand out with higher average returns for BSE companies for more than one year span.

The volumes data for BSE listed companies show that April 2020 would register lowest average volumes for a span of nearly one year. But returns have been in double digit, depicting that the returns in the recent times are sentiment driven only.