Active investor count on NSE cash segment at 10-mth high

A similar number of investors was last seen in September 2022, according to NSE data. In June, the figure stood at 8.9 million. Experts attributed this jump to the outperformance of mid and small cap stocks compared to large caps, reflected in Nifty Midcap 100 and Nifty Smallcap 100 indices.

For instance, while the Nifty rose 17% from a low of 16828 on 20 March to close on 31 July at 19753.8, the Nifty Midcap 100 rose 27% to reach 37757, and the Nifty Smallcap 100 rallied 30% to 11702.85. “Higher retail participation is courtesy the rally in broader markets, not just the benchmark Nifty and Sensex,” said Gaurav Dua, senior vice president and head of capital market strategy at Sharekhan by BNP Paribas. This tied up with industry-wide new client additions, he added.

Number of demat accounts at NSDL and CDSL increased by 2.79 million in June to 123.3 million by July. The number of active retail investors, trading at least once a month in cash segment, has been increasing over the past three months, according to NSE data.

Retail investors jumped on the stock market bandwagon in earnest after the Pandemic-induced lockdown in March 2020.

From around 3 million investors in January 2020, the number soared to 12 million in January 2022, exchange data shows. However, from the peak there was a drastic fall to 6.7 million in April this year. This was because of tepid performance of the midcap and small caps, with Nifty Midcap ending flat at 31794 between January and April and the Nifty smallcap falling 1.3% over the period.

“Midcap and small cap rallied tend to attract retail investors, but their volatile nature could also impact the participation by these investors,” said Piyush Garg, CIO, ICICI Securities.

On the outlook, Grag expects the Nifty to test 18800 from the current level of 19434 over the next two months while he has an upside target of 20800 for the current calendar year. He added though that global market corrections induced by sustained high interest rates and rising of bond yields act as “headwinds.”

Sharekhan’s Dua sounds more optimistic saying that any dips were buying opportunities.

“If there is one thing that’s missing from the current rally, it’s euphoria,” Dua said.

SUpporting his argument, he said that from the 19 October 2021 high of 18604 through the 20 July 2023 high of 19991.85, the Nifty had moved, just 1388 points. While the Nifty EPS had risen to 851 currently from 550 back in October 2021, the trailing price to earnings of the Nifty was down to 22 times currently from 33.7 times back then, indicating that the market was reasonably priced.

Updated: 14 Aug 2023, 09:56 PM IST