Why retail investors continue to root for the underdogs
Subscribe to enjoy similar stories. India’s retail investor landscape is undergoing a dramatic transformation. While a diverse range of stocks has captured the fancy of individuals fishing in the equity markets, the mid-cap and small-cap segment—perceived as riskier but with higher potential returns—remains a key draw.
Despite recent price fluctuations, these stocks have seen a surge in retail interest. About 56% of mid-cap stocks and 72% of small-cap firms analysed by Mint witnessed a sequential rise in retail investor count during the September quarter. In contrast, fewer than half of the stocks in the benchmark Nifty 50 index experienced a similar increase, Mint’s analysis shows.
Among the 127 mid-cap stocks analysed by Mint, 7.1% even added more new individual investors in the financial second quarter than they had in the preceding one. Despite nearly a third of these mid-cap stocks experiencing a share price decline during the September quarter, over 42% managed to grow their retail investor count in that period. Among mid-cap stocks, Yes Bank Ltd, state-run hydropower firm NHPC Ltd and wind turbine maker Suzlon Energy Ltd attracted over a million new retail investors between the July-September quarters of 2023-24 and 2024-25.
According to market observers, the retail rush to small- and mid-cap stocks is driven by younger, risk-tolerant individuals. “Over the past four years, small- and mid-cap stocks have consistently generated the highest returns, resulting in significantly increased participation in this market segment," said Abhishek Shah, co-fund manager at Wallfort PMS. Among small-cap stocks, 72% of 845 companies analysed by Mint grew their retail investor base in the second quarter.
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