GIFT City spillover boosts Ahmedabad's rise as a trading hub, shows data

Share of stock market activity of A'bad up 10x since FY20

Ahmedabad’s proximity to the country’s first international financial centre has helped the city to become a more sizable centre for stock market activities.

 

The share of Ahmedabad in the total value of trades on both bourses is set to end in double digits for the third year in a row, with a month-and-half to go in the current financial year (FY25). The share on the National Stock Exchange (NSE) is 16.9 per cent as of December of FY25 compared to 1.7 per cent in FY20. It rose to 25.3 per cent of the BSE’s total turnover compared to 2.2 per cent share seen in FY20. The data is compiled from the Securities and Exchange Board of India (Sebi) bulletins. The city is identified based on the unique client code of investors and associated data on their location. Many institutions have a presence in the Gujarat International Finance Tec-City (GIFT City), Gandhinagar, which is less than 30 km from Ahmedabad.

 

 

This has made Ahmedabad the second-biggest source of stock market activity by value after Mumbai. Mumbai accounts for 63.6 per cent of the turnover in FY25 on the NSE (59.2 per cent in FY16) and 31.05 per cent on the BSE (56.3 per cent in FY16).

 

"On an individual trader basis, the share of Ahmedabad is around 4 per cent (in terms of turnover), which has been similar for the last few years," pointed out Ankit Mandholia, head of equity and derivatives in the wealth management arm of Motilal Oswal Financial Services. This may mean that the increase in turnover can be attributed to non-individual investors such as proprietary traders or other institutional investors.

 

Ahmedabad accounted for a lower share of individual turnover in the cash market in 2024 than a decade ago, even as other cities like Delhi have done better, shows NSE data. Delhi has managed to increase its share over the same period and remains second only to Mumbai, similar to the scenario a decade ago.

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A lot of brokers have setups in GIFT City, and this may have a spillover effect into nearby Ahmedabad, suggested Mandholia. Motilal Oswal, for example, is due to set up a major office tower in Ahmedabad, the third in the country, after Mumbai and Bengaluru earlier, to help consolidate its Gujarat operations into one location.

 

"If you do proprietary trading out of GIFT City, the state government refunds you the stamp duty," said Rajesh Baheti, managing director of proprietary trading company Crosseas Capital. Proprietary traders do not have clients and trade for themselves. A number of them have relocated to the domestic portion of the GIFT City, which allows entities to deal in Indian markets, he added.

 

Many of the high-frequency traders have moved to GIFT City, he said. High-frequency traders are entities that use computer algorithms to trade far faster than a human being can, and are a major source of trading activity in India and globally. The savings for location in GIFT City can be substantial for algorithmic traders, whose turnover can run into tens of thousands of crores every day, joining others who want to save on stamp duty.

 

"If you're a cash market trader, stamp duty becomes a very important cost... hundreds of brokers have moved," said Tushar Sachade, partner at Price Waterhouse & Co LLP.

 

The notification allowing for the stamp duty relaxation came in early 2020. The numbers have been on the rise since, and growth continues. The latest monthly data for December 2024 shows year-on-year (Y-o-Y) increase of 1-2 percentage points over the same period last year.