Small investors are savvier; look what they did with small-cap stocks
MUMBAI : Retail investors appear to have turned savvier with stock trading, cashing out of small-cap counters while prices ruled high. As a category, retail investors' share in these stocks declined between the March and December quarters, a period when many small-cap stocks generated sky-high returns. In the past, many retail investors used to burn their fingers, buying up overheated shares and selling lower.
For instance, stocks like BSE, Birlasoft, Zensar Tech, Sonata Software, and RBL Bank, which rose between 23% and 415% in the nine months through December, saw the share of the retail category falling 4.26-10.8%. The retail category comprises investors who buy shares up to ₹2 lakh. In all, out of the 250 stocks comprising the Nifty Smallcap index, retail investors cut their stakes in 139, while increasing them in 108.
Against this, mutual funds increased their stakes in 162 out of 250 stocks, while cutting them in only 86. Valuations in some of these companies have gone through the roof. For instance, in BSE, which saw retail stake falling to 34.08% at the end of December from 44.88% at the end of March, price to earnings multiple jumped to 39.54 times from 26.62 times.
In software firm Birlasoft, retail stake fell to 13.66% from 19.84% as the P/E multiple surged to 36.32 from 22.21 times and in Zensar, the stake declined to 12.9% from 17.58% amid the PE rising to 26.99 times from 19.09 times. “Retail has been taking more informed decisions, thanks to them being better equipped, educated and more aware of the risks inherent in small and midcap stocks," said Kishor Kansagra, chairman of BSE Brokers Forum, comprising over 700 brokers across India. “This is a change from the past when retail, acting largely on hearsay,
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