The share of retail investors in NSE’s cash turnover has surged to 45% in FY21 and is showing a similar trend in the first seven months of FY22. According to the Economic Survey, individual investors now account for 44.7% of the equity cash segment. The portion of retail segment was 36% in FY17.
A buoyant stock market has been attracting new investors, with nearly 221 lakh individual demat accounts being added between April and November 2021. “The substantial increase in share of individual investors in FY21 and FY22 can partly be ascribed to the increase in new investor registrations witnessed since February 2020,” said the Survey.
It is to be noted that the average daily cash turnover on the NSE between April and November increased to Rs 70,193 crore, against Rs 61,839 crore for the entire FY21, NSE data showed. After returning a stellar 70.9% in FY21, the Nifty50 has so far surged 18.03% in FY22. The Nifty had given a negative return of 26.03%, when the share of retail investors declined by 0.20 percentage points to 38.8% in FY20.
Market participants observe that the massive structural change in retail flows often cushions the exodus of FPIs from the Indian equity markets. The Nifty50 has lost less than 2% even after FPIs withdrew close to $9 billion since October 2021. Local investors, including mutual funds, bought shares worth $12.1 billion during the same period.
Retail holdings (individuals holding nominal share capital up to Rs 2 lakh) in Nifty500 companies have gone up from 7.6% in FY21 to 8.5% as of December 2021, Capitaline data show. The Nifty500 companies together command about 90% of the country’s market cap and about 98% of the total turnover.