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Thursday, Jun 06, 2002

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Small investors are `back in action'

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THERE has been an all-round increase in investor participation in the stock markets on a month-on-month basis, as the latest figures released by the depositories indicate. Factors such as a swelling interest in PSU stocks and a fall in the indices that has induced many non-active investors have been cited as reasons behind the rise.

The National Securities Depository Ltd (NSDL), for instance, has noted an addition of 37,000 in the `active client accounts' category between April and May. The absolute number in this category moved up from 37,02,097 as on April 30 to 37,41,373 as on May 31.

Market sources view the increase as a more-than-routine rise, especially so in the context of the belief that more and more dormant investors are coming out of their shells to participate once again in the markets.

According to depository participants (DPs), there has been a considerable gain in terms of retail involvement as well, a factor that has played an important role in magnifying the aggregate.

"Active accounts underline the state of the markets, particularly the kind of expectation that small investors build up for themselves," sources with DPs observe. The extent of retail participation, they hope, will go up once the market stabilises and heads northwards.

There has been a change in NSDL's `client accounts opened' category as well. In end-April, this stood at 45,46,067, lower than the 46,28,042 recorded on May 31.

It's almost the same story with Central Depository Services, the Bombay Stock Exchange-promoted venture. DPs affiliated to CDSL have experienced an overall increase in participation, it is pointed out.

A number of issues, each drawing strength from recent developments in the market, are discussed in the same breath. Sources feel that recent weeks were critical for the market from the point of view of Gujarat riots and the Indo-Pak tensions. The latter took a particularly heavy toll on stocks. This found reflection in the movement of the broad indices like the Sensex.

At the moment, there is serious investor interest in PSU counters, including oil stocks, not to mention oddballs representing sectors such as mining, fertiliser, steel and shipping. In recent days, there has been large-scale participation in stocks such as like Steel Authority and Rashtriya Chemicals, it is pointed out.

With war fears receding, the markets are expected to take off further, at least till the next resistance is reached. And investors, it is felt, will try to utilise the upside to their advantage.

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