Investor holding in NSE companies at the highest level

MUMBAI: In the wake of the Corona epidemic, a large number of small investors have been tempted to invest heavily in the stock market to make money in the short-term. As a result, the share of small investors in companies listed on the National Stock Exchange (NSE) in December 2012 has risen to a historic high of 7.5 per cent, up from 7.8 per cent in the same period a year ago.

The participation of retail investors in companies listed on the NSE has also increased at a time when the Nifty benchmark has declined by 1.5 per cent in the quarter under review. The share of large investors, namely high net worth individual investors (HNIs) in NSE companies, has also risen to a record high of 7.5 per cent. As a result, the total share of retail and HNIs has come down to 7.5 per cent. Notably, small investors have invested heavily in IPOs over the past year to seize the opportunity for listing gains.

Market participants said that the participation of small investors in the stock market is increasing due to the boom in the stock market, low interest rates and ease of opening demat accounts and special knowledge of stocks and sectors available on the mobile app.

Market analysts say that this time around, individual investors have been a major contributor to the market boom, while earlier this role was played by institutional investors, especially foreign investors.

The shareholding value of small investors in companies listed on the NSE at the end of December quarter was around Rs. 15 lakh crore as against Rs. 12.5 lakh crore, an increase of almost 30 per cent and double from the end of 2016.

Meanwhile, the shareholding value of foreign investors fell by 1.5 per cent on a quarterly basis to Rs. 4.5 lakh crore as it had risen to Rs. 2,000 crore has been sold. As a result, the holdings of foreign investors in NSE-listed companies are currently at a six-month low of 20.8 per cent.

According to this year's Economic Review, the share of individual investors in total trading on the NSE has increased from 7.5 per cent in 2016-2017 to 6.8 per cent in October 2021. In the first eight months of the current financial year, 25 million new demat accounts have been opened. Along with direct investment in the stock market, investment through mutual funds has also increased. At the end of the December quarter, the shareholding of domestic mutual funds in the listed company stood at 7.5 per cent.