With higher retail participation in primary market, the share of retail investors in companies listed on National Stock Exchange (NSE) reached an all-time high of 7.32 per cent as on December 31, 2021, from 7.13 per cent as on September 30, 2021, primeinfobase.com said on Thursday.

Retail investor means individuals having share worth up to ₹2 lakh. Even in rupee value terms, these investors are holding shares worth ₹18.98-lakh crore, as on December 31, which is all time high. It was ₹18.16-lakh crore on September 30 showing an increase of 4.54 per cent. 

“This was despite the fact that Sensex and Nifty declined by 1.48 and 1.50 per cent, respectively, during this period,” Pranav Haldea, Managing Director of PRIME Database Group, which owns priminfobase.com, said.

Share of High Net Worth Individuals (HNIs) (individuals with more than ₹2 lakh shareholding) in companies listed on NSE also reached an all-time high of 2.26 per cent as on December 31 from 2.12 per cent on September 30, thus taking the combined retail and HNI share to also an all-time high of 9.58 per cent.

Various factors behind spike

According to Haldea, this is a result of a combination of several factors including sharp rally in the stock market, more disposable income and time, lack of alternative investment avenues due to low interest rates and improvement in technology. Individual investors have now emerged as a strong counter balancing force to foreign investors. 

Meanwhile, net outflows from Foreign Portfolio Investors (FPIs) of a huge ₹38,521 crore during the quarter resulted in FPIs share declining to a 9-year low of 20.74 per cent as on December 31, from 21.46 per cent as on September 30.

Most notably, FPIs pulled out ₹44,820 crore from Financial Services and Software sector during the quarter while investing ₹20,334 crore in Retail. Holding of FPIs (in Rupee value terms) in companies listed on NSE stood at ₹53.78-lakh crore as on December 31, a decrease of 1.67 per cent from ₹54.69-lakh crore as on September 30.

According to Haldea, share of domestic mutual funds in companies listed on NSE continued to rise and reached 7.47 per cent as on December 31, up from 7.36 per cent as on September 30. This was after 5 quarters of consecutive decline from March 31, 2020 (7.96 per cent) to June 30, 2021 (7.25 per cent).

Net inflows

The share has increased on the back of net inflows by domestic mutual funds of a huge ₹51,909 crore during the quarter. In INR value terms too, the holding of domestic Mutual Funds went up by 3.26 per cent to an all-time high of ₹19.36-lakh crore as on December 31 from ₹18.75-lakh crore on September 30.

LIC’s share (across 278 companies where its holding is more than 1 per cent) declined marginally to an all-time low of 3.67 per cent as on December 31 from 3.69 per cent as on September 30 and from all-time high of 5 per cent as on June 30, 2012.

In Rupee value terms though, it reached an all-time high of ₹9.53-lakh crore in quarter ending December 31, an increase of 1.46 per cent over previous quarter. LIC also continues to command a lion’s share of investments in equities by insurance companies (77 per cent share).