Stocks

Will retail investors band together to have their voice heard on vital issues?

KS Badri Narayanan Chennai | Updated on August 19, 2019 Published on August 19, 2019

DIIs should emulate the strategy of FPIs

A pull-out of just ₹10,000-crore by foreign portfolio investors from Indian markets forced Finance Minister Nirmala Sitharaman, Finance Secretary Rajeev Kumar and DEA Secretary Atanu Chakraborty to meet them and address their concerns.

As the selling by FPIs triggered a sharp fall in the indices, policy-makers were forced to meet them and give them a hearing.

Foreign investors who met the officials include Morgan Stanley, Nomura, Templeton, Fidelity, GIC (Singapore), and CPDQ to express their concerns over various issues such as the crucial surcharge on FPIs, who are operating as trusts or association of persons without being registered as companies, it was reported.

We will come to know of what transpired at the meeting and the outcome in the coming days.

But the fact that FPIs were able to draw the attention of policy-makers is something that domestic institutions/mutual funds and small retail investors should think of emulating.

Is there a way in which small investors can make their voices be heard, on vital issues?

More in numbers, but...

As long as they are heterogeneous, it is very difficult for individual small investors to make their grievances heard, but as a collective force they can make a lot of difference.

According to SEBI, currently there are 24 recognised associations of investors.

They should first form an umbrella body as the one available for NSE brokers (ANMI) and BSE brokers (BSE Brokers Forum) and widen their base among retail investors.

The umbrella body should meet at regular intervals, say, at least every six months, to discuss common problems that affect their trading or investment agenda and present its case cohesively to SEBI, BSE, NSE, IRDAI, the Ministry of Corporate Affairs and even the Finance Ministry.

If need be, they can also act as a pressure group like FPIs.

On all important issues, the forum could even give feedback to institutions.

Institutions such as the Life Insurance Corporation of India and the Employees’ Provident Fund Organisation should also take a leaf out of the manner in which FPIs got policy-makers to listen to their views. According to a recent study by Prime Database, FPIs own 19.8 per cent of Indian stocks as against 13.8 per cent by the DIIs.

After all, when FPIs are in sell mode, it is the DIIs who take a contra position and help the markets stay afloat.

However, most of the time, domestic institutions, especially mutual funds, remain defensive and mute spectators, even though some of the policy decisions affect their business or result in hardships. Will they rise to the occasion?

Published on August 19, 2019

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.