Budget 2020

What does ‘turnover’ in the stock market indicate?

1. Market turnover indicates how much trading activity took place on a given business day in the market as a whole or individual stock.

2. Turnover can be represented in two ways, traded value in rupees and traded volume in number of trades.

3. Higher turnover in a stock indicates better liquidity which means that it is easier to sell the stock in the market.

4. The turnover ratio for the market as a whole is computed as the ratio of turnover in rupees to market capitalisation.

5. Liquidity condition and market sentiment are two large factors that impact the market turnover.

(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)