Turnover Vs Volume?
- Thread starter man4urheart
- Start date
In options, Turnover has to do with the notional value of the contracts traded in rupees.
Volume here refers to the number of the contracts traded.
Usually volume is an indicator of liquidity of the contract and turnover indicates the depth of the market. Nevertheless, that is usually a redundant distinction.
For Nifty, volume is the total number of shares (of 50 underlying stocks) traded in the cash market.
Turnover is the total value of shares traded in the cash market.
You can see the details here:
NSE - National Stock Exchange of India Ltd.
For Nifty futures, turnover and volume have a different meaning and those have nothing to do with cash market turnover and volume.
Turnover is the total value of shares traded in the cash market.
You can see the details here:
NSE - National Stock Exchange of India Ltd.
For Nifty futures, turnover and volume have a different meaning and those have nothing to do with cash market turnover and volume.
As far as Nifty is concerned, I give more weight to turnover than volume.
Volume isn't a good indicator for Nifty because the same volume in different stocks has different implications for the respective stocks as well as the index.
If a large buyer buys 1 crore shares of J.P. Associates, the stock will rise by 10%-15%, but the Nifty will hardly move.
If the same quantity of Infosys is purchased, Nifty will rise sharply and the stock will just explode.
Volume isn't a good indicator for Nifty because the same volume in different stocks has different implications for the respective stocks as well as the index.
If a large buyer buys 1 crore shares of J.P. Associates, the stock will rise by 10%-15%, but the Nifty will hardly move.
If the same quantity of Infosys is purchased, Nifty will rise sharply and the stock will just explode.
Does turnover also include FII Buying and Selling?
I am still not very clear how turnover has more importance over volume?
As you said: Turnover is value of all the shares in cash market.
In that case value will increase with increase in Price of shares.
It is more a function of price instead of number of shares buy sell.
In your example; Volume for one particular share doesn't matter. I really look for Nifty volume such as does it increased today as compared to yesterday and was today "day candle " up or down!
I am still not very clear how turnover has more importance over volume?
As you said: Turnover is value of all the shares in cash market.
In that case value will increase with increase in Price of shares.
It is more a function of price instead of number of shares buy sell.
In your example; Volume for one particular share doesn't matter. I really look for Nifty volume such as does it increased today as compared to yesterday and was today "day candle " up or down!
Yes, that's true, but the inconsistency due to price variation is much less compared to inconsistency due to lumping of volumes of different stocks.
Let me give an example.
Suppose there is a jeweler who deals in ornaments of gold and silver.
On one particular day, he sells gold jewellery weighing 200 grams and silver jewellery weighing 500 grams.
Next day, he sells gold jewellery weighing 300 grams and silver jewellery weighing 200 grams.
Note: the prices of gold and silver were different on both days.
Which day was better for him - the day he sold 700 grams of jewellery or the day he sold 500 grams of jewellery?
Obviously, the second day.
On the first day, his volume (in grams) was higher but majority of volume came from low priced ornaments and thus the day was less profitable for him.
Just like 10 grams of silver is very different from 10 grams of gold, 1 crore shares volume of J.P. Associates is very different from a 1 crore shares volume of Infosys.
Any analysis done by lumping all volume data together has very limited use.
Let me give an example.
Suppose there is a jeweler who deals in ornaments of gold and silver.
On one particular day, he sells gold jewellery weighing 200 grams and silver jewellery weighing 500 grams.
Next day, he sells gold jewellery weighing 300 grams and silver jewellery weighing 200 grams.
Note: the prices of gold and silver were different on both days.
Which day was better for him - the day he sold 700 grams of jewellery or the day he sold 500 grams of jewellery?
Obviously, the second day.
On the first day, his volume (in grams) was higher but majority of volume came from low priced ornaments and thus the day was less profitable for him.
Just like 10 grams of silver is very different from 10 grams of gold, 1 crore shares volume of J.P. Associates is very different from a 1 crore shares volume of Infosys.
Any analysis done by lumping all volume data together has very limited use.