Retail investors choose to stay the course on equities
TRADE SURGE Investors opened a record 2.4 million demat accounts in Q1 FY21
MUMBAI: Millions of young Indians are dabbling in stocks for the first time as they remain stuck at home, with many of them trying their hands at trading shares to boost income amid pay cuts and job losses.
Securities and Exchange Board of India (Sebi) data showed that investors opened a record 2.4 million demat accounts in the three months to June 30, or 5.6%of t he t o t a l number o f s uc h accounts, reflecting the growing retail participation in the stock markets. In the six months ended June, 3.9 million accounts were added for a total of 43.2 million.
Many of these new investors were lured into trading by the sharp plunge in stock values after the lockdown was announced in end-march, hoping to make a quick buck as share prices rebound. Others took to day trading, hoping to supplement incomes as they had either lost their jobs or had to take pay cuts as companies slashed costs amid the pandemic.
“We are seeing a huge fear of missing out among retail investors. There were a lot of investors who missed the rally from the demonetisation lows. However, the latest fall has presented an opportunity for these invest ors,” said Jimeet Modi, founder and chief executive of brokerage Samco Securities. “Lockdowns and working from home have resulted in people having a lot more time compared to the pre-covid times, contributing to increased investor interest.” While some markets experts have warned that the current stock valuations are hard to justify and near bubble territory, retail investors seemed to be unperturbed by the worries around the pandemic and its fallout on earnings.
Experts attributed the more than 45% surge in stocks since hitting the lows of March to high retail interest.
Retail holding in companies listed on the National Stock Exchange increased to 6.74% by value in the June quarter from 6.45% in the year-ago period, according to data from Prime Infobase data, a part of Prime Database.
Overall, retail holding went up in a massive 1,018 Nse-listed companies in just the last quarter. In value terms, retail holding rose 28% to ₹9.16 lakh crore as of June 30 from the preceding quarter. Companies that saw the most buying by retail investors in the June quarter were Hindustan Unilever, State Bank of India,
Bharti Airtel, Bajaj Finance, Bajaj Finserv and ICICI Bank. During the quarter, retail investors sold most in HDFC Bank, Britannia Industries, Aurobindo Pharma, Lupin and Infosys.
Discount brokerage Zerodha, 5Paise.com and Samco Securities saw high volume of retail trading in the period. Retail brokerage Sharekhan by BNP Paribas saw a 95% jump in trading in May-june against an average of last six months prior to March. For the brokerage, 60% of their new acquisitions were millennials (aged 24 to 40 years) while 30% new clients were from the top three cities of Mumbai, Delhi and Bangalore. Additions from relatively smaller towns were 40%.
Similarly, brokerage Samco Securities said trading volume on its platform has doubled in the June quarter from the pre-covid period of January to March.
Account openings surged 150% from a year earlier. Almost 70% of the customers are first-time investors in the stock markets, with nearly 65% of the customers are in the age band of 21-35.
5Paise.com, an online brokerage, saw new customers more than double with the customer base predominantly young (age group of 25 – 35) coming from tier II and tier III cities and towns.
Most new investors were quietly reading up on equity investing but were staying on the sidelines due to high valuations, according to Prakarsh Gagdani, CEO, 5paisa.com. But, the sharp fall in March and early April allowed many of them to take the plunge, he said. “For now, I see that they are investing in the cash segment. If investors are not leveraging and investing with their own money, the risk is limited,” he said.
NEWDELHI: Foreign portfolio investors (FPI) remained net investors in Indian markets in the first half of August, pumping in ₹28,203 crore in debt and equities on net basis in the period, according to the depositories data.
Also, FPIS turned net investors in the debt segment in August after a gap of five months. Market experts attributed the inflows to better-than-expected corporate earnings and increasing global liquidity. Depositories data showed that a net sum of ₹26,147 crore was invested in equities and ₹2,056 crore in the debt segment by FPIS during August 3-14. This translated into a total net investment of ₹28,203 crore.
In the debt segment, overseas investors turned net investors after a gap of five months. Before this, FPIS had invested ₹4,734 crore in February. FPIS have been net buyers for two consecutive months prior to this. They invested ₹3,301 crore in July and ₹24,053 crore in June on net basis.
Himanshu Srivastava, associate director - manager research, Morningstar India said, “A combination of global and domestic factors has resulted in huge net inflows from FPIS in Indian equities.” He said there has been excess liquidity available in the global markets with major central banks pushing aggressive stimulus measures to combat the coronavirus pandemic and support their dwindling economies.
This surplus liquidity, due to the quantitative easing measures by developed economies, is finding its way into other markets with India too receiving its share and on the domestic front, betterthan-expected corporate earnings have led to capital flows in Indian markets, Srivastava added. The co-founder and COO of Groww, Harsh Jain, said that FPI inflows are in correlation to the fall of US treasury returns.