Retail investors’ exposure in firms at all-time high
Small investors in India pumped more money into stock markets and lifted their holdings in listed companies to a record high in the June quarter, undeterred by a brutal second wave of the pandemic.
Retail investors increased their exposure to NSE-listed companies to an all-time high of 7.18% in June from 6.74% a year earlier, data compiled by Prime Database showed. At the end of March, this was 6.96%.
The benchmark Nifty gained 7% in the June quarter. In value terms, retail holding in companies listed on NSE jumped 16% to an all-time high of ₹16.18 lakh crore from ₹13.94 lakh crore as of March-end.
“A buoyant secondary market and a flurry of new listings have helped channelise retail savings into the capital market. These trends also show the willingness and preference of individual investors to invest directly, rather than indirectly via mutual funds,” said Pranav Haldea, managing director, Prime Database Group.
As markets continued to rise in the last six months, mostly driven by liquidity, retail investors continued to put their money into stock markets, typically chasing returns. Investors opened a record 7.2 million demat accounts in the June quarter, according to Securities and Exchange Board of India (Sebi) data. A total of 2.6 million demat accounts were opened in May and June. There were 62.16 million demat accounts as of June-end.
Strong gains of newly-listed stocks attracted retail investors with initial public offerings (IPOs) worth a total of ₹12,422.72 crore launched in the last quarter.
Out of six issues in this period, three were subscribed more than nine times by retail investors alone.
Overall, retail holding increased in 958 companies listed on NSE in the last quarter. The average stock price of these companies in the same period increased by 37.79%. On the other hand, retail holding fell in 658 companies. The average stock price of these companies increased by a much higher 44.51%.
However, retail holdings in Nifty companies was a meagre 6.89% while they held 15.84% in mid and small cap firms in the June quarter.
Meanwhile, holding of domestic mutual funds in NSE-listed companies fell to 7.25% as of June-end from 7.26% in the March quarter and 7.81% a year earlier. the shareholding of insurance companies also fell to a five-year low of 4.89% as on June. Holdings of foreign portfolio investors as of June-end was 21.66%, compared to 22.46% in the March quarter and 21.05% a year earlier.