The Hindu Business Line : Sensex companies witness growth in retail investors

According to data available on the Bombay Stock Exchange, the number of retail shareholders in the Sensex 30 companies has risen to around 1.32 crore at the end of the financial year 2007 from around 1.20 crore at the end of the first quarter of the financial year.

(Individual shareholders holding nominal share capital up to Rs 1 lakh are considered as retail investors.)

The number of retail shareholders for 22 companies — of the 30 Sensex companies — increased during the period.

"We have seen an almost 30-35 per cent increase in retail accounts on a monthly basis, which is a clear indication that greater numbers of retail investors are entering the market," said Mr E. Prasanth Prabhakaran, Senior Vice-President, Kotak Securities.

Equity is now being viewed as an alternative asset class for investment by retail investors. "Earlier, investors would stick to fixed deposits but with the availability of more information and education, retail investors are investing in safer companies like the Sensex companies," said the chief executive officer of a broking house.

Marketmen attribute the higher retail interest in the blue-chip companies to liquidity as well as to sound information available about these companies.

"Markets have undergone three corrections since March last year. Retail participants are now investing in large-cap companies such as bank stocks or IT companies which are available cheaper on account of a stronger rupee," said Mr Amitabh Chakraborty, President - Equity, Religare Securities.

"Institutions have sold large-caps and retail is buying it," he added.

Another market player said retail investors were mostly long-term and hold on to these stocks, which provide them value.

"The valuations of large-cap stocks were high in the February-March period last year and after the correction, retail investors have bought these stocks," said Mr Chakraborty.

A broker said the performance of retail broking houses was good. This could also indicate the faith of retail investors in the markets.

Reliance Industries, HDFC, Reliance Communication, SBI, and Grasim were among the eight Sensex companies where the number of retail shareholders has decreased.

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