Share of retail in listed firms hits all-time high of 7.32% in December

Low interest rates, higher disposable income and a sharp rally in the markets continue to attract retail investors to direct equity. Consequently, the share of retail and high net worth individuals (HNIs) in listed companies hit an all-time high of 9.58% by December 2021. According to primeinfobase.com, the share of retail investors (individuals with up to Rs 2 lakh shareholding) in companies listed on the National Stock Exchange reached an all-time high of 7.32% in December 2021 from 7.13% in September. In value terms, holdings of retail investors were at Rs 18.98 lakh crore, compared with Rs 18.16 lakh crore in September.

According to Pranav Haldea, managing director, PRIME Database Group, this was despite the fact that the Sensex and Nifty declined by 1.48% and 1.50%, respectively, during this period. The share of HNIs (individuals with more than Rs 2 lakh shareholding) in companies listed on the NSE also reached an all-time high of 2.26% during the same period from 2.12% in September, thus taking the combined retail and HNI share to a record high of 9.58%.

According to Haldea, this is a result of a combination of factors, including a sharp rally in the stock markets, more disposable income and time, lack of alternative investment avenues due to low interest rates and improvement in technology. Individual investors have now emerged as a strong counter-balancing force to foreign investors.

In contrast, the share of foreign portfolio investors dropped to a nine-year low in the December quarter, thanks to net outflows of Rs 38,521 crore. This resulted in the share of FPIs declining to 20.74% from 21.46% as on September 30, 2021. Notably, FPIs pulled out Rs 44,820 crore from financial services and software services companies during the quarter. Holding of FPIs (in value terms) in NSE-listed firms stood at Rs 53.78 lakh crore as on December 31, 2021, a fall of 1.67% from Rs 54.69 lakh crore as on September 30, 2021.

According to Haldea, share of domestic mutual funds in companies listed on the NSE continued to rise and reached 7.47% in December, up from 7.36% in September. This was after five quarters of consecutive decline from March 31, 2020 (7.96%) to June 30, 2021 (7.25%). The share has increased on the back of net inflows of Rs 51,909 crore by domestic MFs during the quarter.