Retail investors’ exposure to companies reaches new highs

Mumbai : Small investors in India continued to put money in equities in the last quarter of 2021, unaffected by the rise in coronavirus cases and monetary policy tightening by global central banks, which rocked domestic markets.

Retail investors’ stake in all listed companies on the NSE rose to an all-time high of 7.32% at the end of the December quarter, data compiled by Prime Database Group showed. This compares to the exposure of retail investors in these companies at 6.90% in the same quarter a year ago and at 7.13% at the end of September quarter.

In value terms too, retail holdings in NSE listed companies hit record highs 18.98 trillion in December quarter, growing by 4.54% 18.16 trillion in the previous quarter.

Analysts said the market correction provided trading opportunities for smaller investors as an entry point. “Investors who were waiting to start stock market trading jumped on the bandwagon as the markets showed some weakness in the last months of 2021. Since stocks have given high returns, especially post-Covid, investors remain optimistic about their bets and consider any ideas. A fall in the market is a good entry point,” said a market analyst, who did not wish to be named.

The benchmark Sensex and Nifty fell nearly 1.5 per cent during the December quarter.

Overall, retail shareholding increased in 871 companies listed on the NSE in the December quarter. The average share price of these companies saw an increase of 15.51% during this period. Meanwhile, retail holdings in 759 companies decreased, but the average stock price of those companies increased by a whopping 20.35%.

“It is also worth noting that there is a continuing heavy presence of retail investors in mid- and small-cap companies, which institutional investors generally stay away from. If only Nifty companies are seen then the picture is very different. Pranav Haldia, managing director, Prime Database Group, said, “The retail stake in these companies was 7.08%, which declined marginally to 6.68% in the case of top 100 companies listed on NSE.”

According to the Securities and Exchange Board of India (SEBI) data, investors opened a record 10.23 million demat accounts in the December quarter, with an average of 3.41 million every month. This is in comparison to 8.21 million demat accounts opened in the September quarter. At the end of 2021, a record 30.8 million demat accounts were opened, making India the highest ever demat account of 80.6 million.

Meanwhile, the share of individuals with high net worth (HNI) or more The 2 lakh shareholding in NSE listed companies also touched a record high of 2.26% till December, as against 2% in the same period last year. This took the combined retail and HNI share to an all-time high of 9.58% at the end of December.

In the institutional segment, net outflows by foreign portfolio investors (FPIs) 38,521 crore during the quarter resulting in their share falling to a nine-year low of 20.74% till December.

The share of domestic mutual funds across all listed companies on the NSE continued to rise, from 7.47% in the previous quarter. The net inflow of domestic mutual funds was 51,909 crore in the December quarter. This follows the decline for five consecutive quarters since March 31, 2020. The total holding of insurance companies fell to a six-year low of 4.79% in the previous quarter.

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