Retail investors’ exposure in companies reaches a new high

Private investors’ shareholdings in all listed companies on the NSE reached a record high of 7.32% at the end of December quarter, data collected by Prime Database Group showed. This compares with the exposure of retail investors in these companies of 6.90% in the same quarter a year earlier and 7.13% at the end of the September quarter.

In terms of value, the retail portfolio of companies listed on the NSE also hit record highs ₹18.98 trillion in the December quarter, up 4.54% from ₹18.16 trillion in the previous quarter.

Market corrections offered trading opportunities to small investors as entry points, analysts said. “Investors waiting on the sidelines to start stock market trading jumped on the bandwagon as the markets showed some weakness in the last months of 2021. As equities have yielded high returns, especially after covid, investors remain hopeful about their efforts and may consider “Falling in markets is a good starting point,” said a market analyst, who did not want to be named.

During the December quarter, benchmark Sensex and Nifty fell by about 1.5%.

On an overall basis, the retail shareholding in 871 companies listed on the NSE grew in the December quarter. During the period, the average share price of these companies increased by 15.51%. Meanwhile, the retail portfolio of 759 companies decreased, but the average share price of these companies increased by a much higher 20.35%.

“What is also important to note is the continued overwhelming presence of retail investors in medium and smallcap companies, which institutional investors typically stay away from. The picture is very different if you only look at Nifty companies. The retail share in these companies were a paltry 7.08%, declining marginally to 6.68% in the case of top 100 companies listed on the NSE, “said Pranav Haldea, CEO, Prime Database Group.

Investors opened a record 10.23 million demat accounts in the December quarter, averaging 3.41 million each month, according to Securities and Exchange Board of India (Sebi) data. This compares with 8.21 million demat accounts opened in the September quarter. By the end of 2021, a record 30.8 million demat accounts were opened, leading to a total of the highest ever 80.6 million demat accounts in India.

Meanwhile, the proportion of people with high net worth (HNIs) or people with more than ₹2 lakh shareholding in companies listed on the NSE also reached a record high of 2.26% in December, rising from 2% in the same period last year. This lifted the combined retail and HNI stock to a record high of 9.58% at the end of December.

In the institutional segment, the net outflow from foreign portfolio investors (FPIs) is on ₹38,521 crore during the quarter resulted in their share falling to a nine-year low of 20.74% in December.

The share of domestic mutual funds in all listed companies in the NSE continued to rise, hitting 7.47% last quarter. Domestic investment funds had net inflows on ₹51,909 crore in the December quarter. This follows five consecutive quarters with a decline from 31 March 2020. The total share of insurance companies fell to a six-year low of 4.79% last quarter.