Big retail investors take a different path from the small, and gain

Big retail investors bought nearly 2,15,000 shares in Britannia Industries between December 2011 and June 2012. This increased their stake from 3.33 per cent to 3.51 per cent. Small retail investors, meanwhile, sold around 1,50,000 shares and reduced their holding in the company. The stock gained 17.1 per cent in this period, beating the market.

This is not an isolated instance. There have been many cases over the past two quarters of big retail investors buying and selling differently than the small investors and gaining in the process.

Different sector bets

The two sets of investors differed in the sectors they preferred. In all, in 16 of the 62 sectors, big and small individual investors acted differently.

For instance, big retail increased its stake in diamond, gems and jewellery companies from 8.5 per cent in December to 9.3 per cent in June. Small investors, on the other hand, pared their holding in these companies from 10.4 per cent to 10 per cent.

Titan Industries and Gitanjali Gems are some of the jewellery companies that saw big individual investors increase their stake and small investors pare theirs. With the sector’s market cap having risen by around 22 per cent between December and June, the big investors seem to have bet right.

Similarly, in the construction sector, while the big investors increased their share from 1.5 per cent to 1.6 per cent, small retail made for the exit and reduced its stake from 12.3 per cent to 11.5 per cent. This pattern was seen in companies such as JP Associates and Punj Lloyd.

The sector’s market capitalisation has grown almost 38 per cent during December 2011 to June 2012. Again, large retail investors got it right.

There are also cases such as the edible oil sector where large individual investors reduced stake from 3.5 per cent to 2.6 per cent while small individuals increased their holding from 7.6 per cent to 8.3 per cent. The reduction in large retail stake in Agro Tech Foods from almost 14 per cent in December to 8.2 per cent in June is a case in point. The sector’s market cap increased by only a marginal 0.5 per cent over the past two quarters.

Big investors hold less

But overall, holdings of large retail investors in CNX 500 companies stood at 1.9 per cent of the outstanding market value by end June 2012. Small retail investors held a much larger chunk of the shares at 6.7 per cent. This is only slightly different from the shareholding pattern almost five years back during the market peak of December 2007. At that point, large retail shareholders held 1.7 per cent stake and small investors 6.8 per cent in the outstanding market capitalisation of Indian companies. Big retail investors are those individuals who invested over Rs 1 lakh in a company’s stock.

>anand.k@thehindu.co.in

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