Indian retail investors are set to be big beneficiaries of the recent rally in the stock markets as they have increased their participation and holding of NSE listed companies over the last 18-months. The retail holding of NSE listed companies hit a record high of 7.18 per cent in the quarter ended June 2021, in line with the sharp rise in new investor accounts over the last 18-months and a jump in retail participation in both secondary and primary markets. It stood at 6.42 per cent in Dec 2019.
According to data sourced from primeinfobase.com, the retail ownership of NSE listed companies which stood at 6.42 in December 2019 and 6.55 per cent in March 2020, has now hit an all time high of 7.18 per cent. The previous high was 7.1 per cent in June 2009. If only free float (non-promoter holding) is taken into account, retail ownership by value percentage went up to 14.49 per cent in the quarter ended June 2021, up from 13.86 per cent in March. It stood at 12.75 per cent in Dec 2019.
Even in rupee value terms, the retail holding in companies listed on NSE reached an all-time high of Rs 16.18 lakh crore from Rs 13.94 lakh crore on March 31, 2021, an increase of 16 per cent. In the same period, Sensex and Nifty rose by 6.01 and 7.02 per cent respectively.
“A buoyant secondary market and a flurry of new listings have helped in channelising retail savings into the capital market,” said Pranav Haldea, MD, PRIME Database Group.
Holding of High Net Worth Individuals (HNIs) (individuals with holding of more than Rs 2 lakh in a company), also increased to 2.10 per cent as on June 30, 2021 from 1.98 percent, taking the combined retail and HNI holding to an all time high of 9.28 per cent.
Even as retail participation has been on a rise since January 2020, the six-month period between January and June 2021, has witnessed a higher momentum. While the retail holding dipped from 7.01 per cent in September 2020 to 6.9 per cent in December 2020, it rose significantly over the next six months, which has also witnessed record opening of investor accounts and fund mobilisation through IPOs which has seen big retail participation.
From 2.01 crore investor accounts at the end of January 2020, CDSL saw its investor accounts more than double to 4.19 crore accounts by the end of July 2021. While CDSL added 2.18 crore accounts over last 18 months, over 1.15 crore accounts (52%) have been added over the last six months at a monthly average of 19.28 lakh accounts per month.
As retail investors and HNIs preferred to invest directly into the stock markets, the mutual funds witnessed a marginal dip in their holding of companies listed on NSE. Data shows that MF holding of NSE listed companies came down to 7.25 per cent in the quarter ended June 2021.
MF holding has been declining over the last five quarters. It stood at 7.96 per cent in March 2020. However, in rupee value terms, the holding has nearly doubled over the five quarters from Rs 8.7 lakh crore to Rs 16.33 lakh crore in line with the rise in markets.
While FPI ownership hit a 5-year high of 22.74 per cent in December 2020, following record fund flows into the Indian equities, their holding has come down over the last two quarters in line with a dip in inflow of funds, especially in the last quarter. At the end of the June 2021, their holding stood at 21.66 per cent. While FPIs invested a net of Rs 2.74 lakh crore in FY’21 at an average of Rs 68,500 crore per quarter into Indian equities, the net inflow in the quarter ended June 2021 stood at only Rs 4,602 crore.
Besides, retail, the other category that saw an increase in its holding has been the government and the private promoters. While the holding of government (as promoter) in companies listed on NSE increased to a one year high of 6.05 per cent as on June 30, 2021, from 5.70 per cent as on March 31, 2021, due to a huge run up in PSU stock prices, the percentage holding of private promoters in companies listed on NSE increased to 44.42 per cent from 44.09 per cent on March 31, 2021. Over a 12-year period, private promoter ownership has been steadily increasing. It has increased from 33.60 per cent on June 30, 2009.