Stock markets: Retail investors on a high

Apr 28 2014, 13:28 IST
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Experts advise retail investors to not limit themselves to profit booking and shuffling portfolios, but be more active to benefit from any change in the business environment. Experts advise retail investors to not limit themselves to profit booking and shuffling portfolios, but be more active to benefit from any change in the business environment.
SummarySurge in stock markets over last two months lifts retail investor mood.

last four years but now it is coming back. Investors are looking forward to May 16 when they expect the BJP-led coalition to get a strong mandate and form a stable government,” said George.

But retail investor behaviour seems to be more rational and guarded as they are not entering with a motive to speculate. Dinesh Thakkar, chairman and managing director of Angel Broking said that retail investors are mostly churning their portfolio and not coming in with fresh investments.

“Retail investors are coming in but certainly not in the same proportion as the FIIs. While they are not bringing in fresh investments, all that they are doing is churning their portfolio by booking profits in stocks that have risen and investing in companies that are available at lower valuations,” said Thakkar.

Even at the ground level, employees working with broking firms say that there is a rise in their business. A manager with a leading brokerage firm in New Delhi, who handles close to 500 retail clients at the brokerage firm said that the number of his customers who have begun short-term trading has jumped over the last three months. “From around 30 of my customers who were doing intra-day trading till three months back, the number has gone up to close to 125 now,” said the relationship manager with the brokerage firm who did not wish to be named.

DECIDING STRATEGY

There is a feeling in the market that Indian equities will be one of the better performers among the emerging economies as there are concerns with other economies. While China is witnessing a slowdown, there are geopolitical concerns with respect to Russia.

“Among the emerging economies, India is a more favourable destination for FIIs because of its demographic structure and markets,” said SN Lahiri, head of equities at L&T Mutual Fund. While FIIs continue to invest in India, retail investors should take the cue from them.

Generally when the markets are hitting new highs, investors get afraid of investing in the market at higher levels and are often seen waiting for the markets to correct before they can get in. While that may not be the best approach, experts say that retail investors at this time should not limit themselves to profit booking and shuffling their portfolio but become more active participant so as to benefit from any change that may come in the business environment.

There are some who feel that a new strong

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