Equity trading volumes in India have fallen to the lowest level since December as the selloff in shares of smaller companies slows the rush of retail investors into the nation’s $4.3 trillion market, even as institutions snap up large deals.

The daily cash trading volume has shrunk to $10 billion from a record $19 billion in early February, with recent sessions account for the bulk of the decline, data compiled by Bloomberg show.
Warnings from India’s securities regulator that small caps are overheating has sparked a pullback in local shares, with the gauge of such firms tumbling more than 6% this month. Individual investors, who typically drive cash volumes, are likely hold off on fresh purchases until the market stabilizes, keeping trading activity subdued.
“Retail investors were caught on the wrong side” and they tend to stay on the sidelines until a clear trend emerges, said Ashish Kyal, founder of Waves Strategy Advisors Pvt.
Despite the broader market downturn, appetite for large deals remains strong among institutions. Block trades have topped $7 billion this year, set for their best quarter in 14 years, the data show.