Trading activity on the National Stock Exchange (NSE) has weakened sharply, with market turnover dropping to its lowest level in nearly two years as investors retreat amid rising uncertainty over returns, particularly in mid‑cap and small‑cap stocks.
As per the data presented by the market, the average daily turnover recorded at the NSE slid dramatically in December 2025, dropping to approximately Rs. 90,076 crore, a number last seen towards the end of ‘23.
This development is a sharp decline from the Rs. 1,04,576 crore recorded in November, along with the ₹98,740 crore recorded in October.
The dip in trading volume is also closely associated with underperformance across key market segments. The mid-cap and small-cap indices have underperformed the large-cap indices year to date.
The Nifty Midcap 150 index has registered modest gains, while the Nifty Smallcap 250 index has actually fallen in the past few months. As a consequence of the marginal gains, retail and high-net-worth participants have restrained trading activity due to concerns about the growth outlook.
Participants in the market have reported that muted volatility has discouraged activity, as there are fewer instances of price movements that are beneficial for short-term profits.
Since market indices such as Sensex and Nifty50 are showing volatile patterns without an obvious trending direction, investors are opting to stay on the sidelines.
However, there are macroeconomic factors that are also affecting market sentiment. Foreign portfolio investment is flowing out of the Indian market. There were substantial outflows in December and throughout 2025.
This trend is adding pressure to the market and affecting overall sentiment. Additionally, uncertainty about global economic indicators and trade deals has also affected market sentiment.
It is recommended by analysts that if the return on investment does not improve in the underperforming sectors, then total turnover might remain limited. The current slight decline in turnover indicates that a more cautious set of investors is struggling to understand the return on investment.