One of the critical aspects to consider while trading is the volume of the stocks. Stocks that usually have a higher volume provide more liquidity and effective entry and exit trading strategies. But are you a new trader and do not know where to find them? Do not worry we have got you covered. Check out this blog to find the list of the most active stocks on the NSE in terms of traded volume. Also, learn the meaning of traded volume and its importance in stock trading.
Read More: How to use volume in trading?
Which are the top traded stocks by volume on NSE?
The list of top-traded stocks by volume on the NSE is quite dynamic. The current list of such stocks as of September 7th 2023 is given below.
Most Active stocks on NSE – NIfty 50 for the past 1 month period and volume traded
|Stock name||Volume traded in 1 month period|
|State Bank of India||3,27,36,325|
|Tata Steel Limited||2,07,11,952|
|ICICI Bank Limited||1,66,86,062|
|HDFC Bank Limited||1,41,50,459|
|Axis Bank Limited||1,09,22,609|
|Tata Motors Limited||98,93,466|
|Mahindra and Mahindra Limited||92,57,291|
|Coal India Limited||67,44,074|
What is traded volume?
Traded volume, in the context of financial markets, represents the total number of shares, contracts, or units of a financial asset that change hands during a specific time frame, such as a trading day. It serves as a vital indicator of market activity and liquidity. High trading volume suggests an active market with many participants, making it easier to buy or sell assets at prevailing prices. Conversely, low trading volume may indicate a less active market, potentially leading to wider bid-ask spreads and challenges in executing large transactions.
Why is volume significant in trading?
The concept of volume is one of the most critical concepts in stock trading. The significance of volume in stock trading is highlighted in the points hereunder.
In the world of stock trading, liquidity is a crucial factor. It represents how easily you can buy or sell a particular stock without significantly impacting its price. The volume provides a key indicator of the liquidity of stocks. Stocks with high trading volumes typically have tighter bid-ask spreads, meaning you can buy and sell them at prices closer to the market rates. On the other hand, low-volume stocks can be illiquid, making it more challenging to execute trades without affecting the stock’s price. Liquidity is essential because it ensures you can enter or exit positions efficiently, which is particularly important for day traders and short-term investors.
Volume plays a pivotal role in identifying trends in the stock market. When a stock is experiencing an uptrend, it often accompanies a significant increase in trading volume as more buyers enter the market. Conversely, in a downtrend, higher volumes tend to coincide with increased selling pressure. By analyzing volume along with price movements, traders can confirm the strength and sustainability of a trend. A strong trend with high volume provides more confidence to traders compared to a weak trend with low volume.
Understanding market sentiment
The volume also reflects market sentiment in general. For example, a sudden surge in trading volume can indicate heightened interest or excitement about a particular stock or the overall market. This may be due to significant news, earnings reports, or market events. Understanding the sentiment behind volume can help traders anticipate market moves and react accordingly. A high volume on positive news might indicate bullish sentiment, while a high volume on negative news could suggest bearish sentiment.
Volume can confirm price movements for traders and help them in making suitable trading decisions. When the price of a stock rises or falls accompanied by high volume, it suggests that the price move is more likely to be sustained. This confirmation provides traders with confidence in their trading decisions. Conversely, when price movements occur on low volume, they are often considered less reliable, as they may be driven by a smaller number of participants and lack the broad support required for a sustainable trend.
Identifying support and resistance levels
Volume plays a pivotal role in trading by aiding traders in identifying significant support and resistance levels, confirming their validity, and anticipating potential breakouts or breakdown. When a price level has historically experienced high trading volume, it becomes a focal point for market participants, signifying strong support or resistance.
Additionally, surging volume during attempts to breach these levels can provide confirmation of their significance and offer cues for potential breakouts or breakdowns. Traders often use volume to strategically place stop-loss orders, safeguarding against unfavourable price movements. In intraday trading, volume analysis helps identify short-term support and resistance zones, facilitating quick decision-making for day traders
One of the primary requirements of a successful portfolio is understanding the price and volume dynamics. Traders need to keep a close track of the stocks that are being traded actively on the stock exchange and are supported by sufficient volume. The list of top traded stocks by volume on NSE is available on the official website of NSE as well as broker websites. Traders can therefore have real-time information on the changing volume of these stocks. This helps them understand the bullish and bearish markets and accordingly shape their portfolio.