50% rise in small-midcap stocks as retail investors rise

Ahmedabad. 28 August 2020, Friday

Smallcap and midcap stocks have also risen by as much as 30 per cent on the back of a significant increase in retail investors since the lockdown.

According to market insiders, 2.5 million new demat accounts have been opened so far since the lockdown. People opened a large number of online demat accounts because they had to stay home during the lockdown.

Most of the people who opened new demat accounts were small investors who entered the market for the first time. They started trading in the stock market as part of an alternative arrangement that adversely affected revenue due to the lockdown. As these new investors entered the market with limited capital, they focused specifically on small cap and midcap stocks. As a result, small-cap stocks, which have seen large-scale trading in the sector by these new investors, have risen by as much as 30 per cent.

The smallcap index has so far risen 5 per cent from the bottom in March, with new retail investors trading heavily in the region's stocks. Against this, the Sensex has risen by 20 per cent so far from its March low.

The sources further said that in the months following the lockdown, the retail sector accounted for about 40 per cent of the total market volume. The lockdown was around 90 per cent during the previous period. Thus, the share of retail investors in the post-lockdown market increased.