Small investors cash out as markets rally
MUMBAI : Small investors, who piled on to shares in the three years to 31 March, have turned net sellers in the June quarter despite the market rallying 14% from a March low to record highs by June-end on robust purchases by foreign portfolio investors (FPIs). Market experts attributed the selling by small investors to a combination of initial scepticism about the rally and the need to meet margin calls on loss-making derivatives positions.
After investing ₹2.8 trillion in stocks during FY21-23, retail investors sold a net of ₹21,100 crore worth of stocks in the June quarter of the current fiscal year, according to data from National Stock Exchange (NSE) of India Ltd. Of this, ₹2.8 trillion, almost three-fifths was invested in FY22, with the inflows moderating to ₹49,200 crore in the previous fiscal year to selling in the first quarter of FY24.
These investors prefer to buy and sell directly on the market rather than through the mutual fund route. Small investors, or those investing up to ₹2 lakh of a company’s equity capital, cut their stakes in 58% of Nifty 500 companies that have reported their shareholding patterns thus far.
Out of the 439 companies that reported their shareholdings, retail investors have cut stakes in 253, and raised stakes in 185 of the index members. While small investors sold their stakes, FPIs made significant net purchases of ₹1.03 trillion in the June quarter.
The massive buying drove the Nifty 50 index from a low of 16,828 on 20 March to 19,189 on 30 June, enabling the market to break out of a near 20-month range of 15,184 to 18,887.60. “Direct retail investors have become smarter with markets trending mostly one-way post the pandemic, but many also got trapped by the lure of options trading,
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