Market dynamics reveal an intriguing contradiction as aggregate trading volumes contract while specific securities demonstrate exceptional activity
Trading volume stands as one of the most crucial indicators in equity markets. Similar to price movements, fluctuations in the quantity of shares exchanged provide unfiltered, objective perspectives on investor sentiment toward particular securities. Analyzing volume patterns alongside price trends reveals the underlying health of individual stocks. Quantity-based volume metrics illuminate actual investor demand for corporate equities.
October witnessed a remarkable recovery that propelled the domestic benchmark Nifty50 beyond the 26,000 threshold. This surge brought the index close to its 52-week peak, yet price movements throughout the year have remained turbulent. Market sentiment wobbled during early 2025, with the primary index continuing its retreat from unprecedented highs. Ambiguous international signals and concerns surrounding President Donald Trump’s tariff policies dampened investor confidence.
Broader market segments experienced comparable volatility, although aggressive monetary easing by the Reserve Bank of India combined with declining inflation rates proved beneficial for domestic economic outlook. International markets similarly navigated tariff-related turbulence effectively, advancing toward all-time highs during the third quarter of 2025. This momentum lifted the benchmark Nifty50 from its 10-month nadir in April, followed by consistent appreciation. Market participants also monitored stable corporate profit reports, abundant monsoon rainfall, and subdued petroleum prices.
The Volume Paradox: Declining Activity Amid Rising Prices
Yet despite headline index gains and encouraging signals from broader market segments, trading volumes for domestic securities exhibited a contradictory pattern. Monthly average traded quantities for NSE500 constituents declined approximately 18% during the initial 10 months of 2025 compared to 2024’s monthly averages, signaling reduced aggregate trading activity across the broad market spectrum. Volume contracted sharply during 2024’s fourth quarter as domestic markets extended losses following all-time peaks. Throughout this year, overall volume trends have remained subdued except for a temporary surge during the June quarter.
What patterns emerge when examining individual security volumes? To investigate this phenomenon, a comprehensive analysis focused on stocks maintaining market capitalizations exceeding Rs 500 crore, scrutinizing their monthly average trading quantities. Securities experiencing volume surges this year versus last year were identified, revealing a subset of high-demand stocks contradicting the volume decline observed across the well-defined Nifty500 universe. However, examining volume trends alone provides incomplete insight into underlying investor sentiment.
Consequently, price performance received equal scrutiny. Attention shifted toward securities delivering substantially superior returns compared to the Nifty500 index year-to-date. For additional refinement, only companies reporting increases in both net revenue and net profitability during the trailing twelve months (TTM) ending Q1FY2026 versus the prior TTM were selected. This methodology yielded a robust dataset of 127 securities.
Identifying Market Winners: The Elite 111
To spotlight the strongest performers within this group, analysis narrowed to securities experiencing minimum 10% volume increases year-over-year. This filtration process produced a final list of 111 stocks.
Year-to-date performance for this selected group proves impressive, particularly considering the benchmark index recorded only moderate advancement with the majority of gains concentrated in October. Among these 111 securities, 79 delivered year-to-date returns exceeding 20%, while 29 soared beyond 50%. Since expanding trading volume typically indicates market robustness and liquidity depth, these companies are substantiating price appreciation with tangible revenue and profit growth during challenging market conditions.
The Nifty500 index encompasses approximately 96% of free-float market capitalization and accounts for a comparable proportion of total NSE turnover. Consequently, trends within this market universe offer valuable insights into general domestic equity activity. SEBI data confirms that NSE average daily turnover declined to Rs 0.99 lakh crore during the first nine months of 2025, representing a substantial drop from Rs 1.16 lakh crore in 2024.
Global Context and Domestic Implications
International markets remain predominantly favorable, with American and Japanese equities at historic peaks and Chinese stocks reaching decade highs. Nevertheless, domestic equity gains have been constrained, and overall volume contraction suggests investors are adopting increasingly selective approaches toward security selection.
Future Market Trajectory
India’s petroleum imports continue climbing despite muted global commodity pricing. This reflects stable underlying economic momentum, as crude oil consumption typically correlates with industrial sector strength. According to the Petroleum Planning and Analysis Cell, India’s crude oil imports increased 1.7% month-over-month to 19.93 million metric tonnes in September. Year-over-year, crude imports jumped 6.1% from 18.79 million tonnes in September 2024. Imported refined products surged approximately 21% annually to 4.40 million tonnes in September, while product exports declined 4.8% to 6.18 million tonnes.
Meanwhile, retail investor capital inflows remain vigorous. India now boasts over 20 crore demat accounts, with record-breaking systematic investment plan (SIP) contributions in recent months despite broad market volatility. This represents a dramatic transformation in the investment landscape driven by technological advancement, regulatory evolution, and demographic shifts making markets accessible to the masses. Mutual fund SIP inflows reached an unprecedented Rs 29,361 crore in September 2025, rising 4% from the previous month. SIP accounts climbed to 9.25 crore compared to 8.99 crore in August, while SIP assets under management (AUM) surged to Rs 15.52 lakh crore.
Why Volume Matters: Technical Significance
Rising trading volume generally indicates substantial buying support across diverse investor segments. Securities exhibiting this characteristic can typically deliver enhanced returns, especially when supported by robust financial performance. Volume serves as a critical technical indicator for investors, reflecting market liquidity and order execution efficiency. Elevated trading volume can signify heightened market activity and continuous information flow.
Security demand within a broadly volatile trading environment shaped by uncertain international forces indicates that stocks recording gains alongside volume increases merit attention. Companies demonstrating increased trading activity, delivering returns surpassing broad indices like Nifty500, and reporting net profit and net sales growth in recent quarters appear positioned for continued momentum as the headline Nifty50 approaches record territory.
Long-Term Perspective: Temporary Deviation or New Normal?
The widespread volume decline most likely represents a temporary departure from a robust long-term trajectory, as India’s capital markets have expanded dramatically in both magnitude and accessibility. Over the past decade, domestic markets have facilitated capital mobilization approaching Rs 93 trillion through equity and debt instruments, according to market regulators. The number of unique investors in India has soared from approximately four crores in FY2019 to exceeding 13.5 crore currently. Growing financial literacy and consistent regulatory improvements continue driving retail investor participation. Recent steps have been taken to streamline foreign portfolio investor (FPI) regulations as well.
