In what can be seen as a shift to safer havens, retail investors have been driving their investments towards bigger and better-placed companies that are more capable of tiding over the pandemic.
In what can be seen as a shift to safer havens, retail investors have been driving their investments towards bigger and better-placed companies that are more capable of tiding over the pandemic. Equity analysts had warned in March that investors need to invest in companies that have stronger balance sheets, enabling them to withstand the headwinds that the pandemic brought along. According to the shareholding pattern available on the stock exchanges, companies like Hindustan Unilever (HUL), State Bank of India (SBI), Tita, and ICICI Bank have seen a decent surge in retail investors.
India’s largest public-sector lender State Bank of India, had 24,11,386 retail shareholders with share capital upto Rs 2 lakh. This translated to a 5.72% shareholding of the total share capital of SBI at the end of the March quarter. Retail investors increased to 28,27,766 at the end of the previous quarter, holding 7% of the total shares of the bank. ICICI Bank also enjoyed a surge in retail participation with the number of shareholders going from 10,49,715 at the end of March to 12,35,450 at the end of June. In percentage terms, the increase was from 6.26% to 6.6% in one quarter.
FMCG major, Hindustan Unilever Limited (HUL), which saw its shares spike 26% between March and April when the rest of the equity markets were muted, was also seen being favoured by retail investors. In June the number of retail shareholders in HUL was 6,62,087, increasing from 4,42,099 shareholders at the end of March quarter of the previous fiscal. Retail investors in total share capital increased from 10.8% to 11.16%. Brokerage firms and market analysts were seen advising investors to invest in bigger companies with proven track record and strong balance sheets, in the month of March as stock markets were beginning to witness weakness.
Clearly, investors followed the advice with a number of large-cap firms witnessing a decent jump in retail investor shareholding. Ace investors Rakesh Jhunjhunwala’s favourite stock Titan Company was also on the stocks to benefit from this migration of retail investors to better-placed companies. Retail shareholders in Titan Company were at 3,05,835 at the end of March, this was 9.38% of the total shareholding of the Tata Group company. By the end of the first quarter of this fiscal retail participation increased to 3,54,915 shareholders. Indian Oil was also one of the biggest beneficiaries of this surge in retail shareholding, as retail investors increased from 5,75,005 to 7,19,801 between March and June this year.