How Individual Retail Investors have emerged as Strong Participants in the Stock Market?

In this article we are going to discuss about the strong participation of Retail Participation in the stock market is gradually reducing the dependency on Institutional Investors. Here, in this article, we will be discussing some of the interesting facts and figures, that how the participation of Individual Retail Investors is increasing in the Indian Stock Market, so let’s get started!

1) Rising Participation of Retail Investors in Domestic Equity Market:

i) Rising SIPs Amount:

• Individual Retail Investors generally enters the equity market in 2 ways:

• Through Direct Investing in the Equity Market
• Through Investing in Mutual Funds via Systematic Investment Plan (SIP)

• The Rising figures of SIP Contribution towards the equity market which is more than Rs. 11,500 Cr. on monthly basis as of January 2022 shows how well the Retail Investors are supporting the market.
• In the last month of January 2022, the total outflows from Foreign Institutional Investors (FIIs) in India were Rs. 41,346 Cr.

ii) Increasing New Demat Account Openings:

• The New Demat Account Openings in India was just 3 Lakhs as of FY11 which got increased to 30 Lakhs in FY17, and 49 lakhs in FY20.
• In FY21, the new Demat account openings were 1 Cr. 42 Lakhs.
• The rising figures of new Demat account openings show how rapidly the participation of retail investors has increased in the equity market post-pandemic.
• On the monthly comparison front, November 2021 recorded the highest ever new Demat account with a record figure of 29 Lakhs.
• Cumulative Demat Account in November 2021 was 7.7 Cr., which was 3.6 Cr. in the pre-covid era i.e., March  2019

2) Major Drivers for Rising Participation Retail Investors in Stock Market over last 2 years:

• Digitalization – Improving Technology
• Social Media – Improving Awareness Regarding Demat Accounts 
• Rising Disposable Income & Time
• Lack of Alternative Investment Avenues due to Low-Interest Rates
• Growing Awareness about Equities
• A sharp rally in the stock market post-COVID-led market

3) Share of Retail Investors’ Equity Holding in All NSE-Listed Companies

• In the listed companies of the Nifty Stock Exchange (NSE), the holding of the Retail Investors is around 7.32% which is the highest ever held by the retail investors.
• On the amount basis, the investment value of Retail Investors is around Rs. 18.98 Lakh Cr. as of December 2021 which got increased by 4.54% QoQ from Rs. 18.16 Lakh Cr. in September 2021.

4) Top 10 Stocks with Highest Retail Investors Holdings (As of Dec 31, 2021):

In the terms of the top 10 stocks with the highest retail investors holding as of December 31, 2021, on the highest amount invested basis, are as follows:

• Reliance Industries which is having a market capitalization of Rs. 15,81,573 Cr. Here, the retail investors hold a 7.52% stake which amounts to Rs. 1,18,951 Cr.
• In the highest shareholding of retail investors according to the highest amount investors, the second stock is HDFC Bank with retail participation of 7.99% amounting to a stake of Rs. 65,292 Cr. HDFC Bank is having a market capitalization of Rs. 8,17,476 Cr. as of December 2021.
• In HUL, Larsen & Toubro, and Infosys, the invested amount of Retail Investors is Rs. 62,064 Cr., Rs. 51,397 Cr., and Rs. 49,800 respectively.
• Retail Investors are holding a 7.50% stake in Bajaj Finance, with a total amount invested of Rs. 30,930 Cr.

5) Top 10 Stocks with Highest No. of Retail Shareholders (As of Dec 31, 2021):

In the terms of the top 10 stocks with the highest retail investors holding as of December 31, 2021, on the highest amount invested basis, are as follows:

• The highest number of retail investor participation is in Yes Bank wherein there are 41.01 Lakh retail shareholders.
• In Reliance Power, there are 34.40 Lakh retail shareholders as of 31^st December 2021 with just a market capitalization of Rs. 5,032 Cr.
• Retail Shareholders in Reliance Industries, Tata Motors, Tata Power, and ITC are 32.03 Lakhs, 31.98 Lakhs, 31.26 Lakhs, and 29.51 lakhs respectively.
• In this list, HDFC Bank with 18.64 Lakh Retail Shareholders, ranks the last in the retail shareholder participation.

6) Top 10 Stocks with Highest Retail Holding % (As of Dec 31, 2021):

In the terms of the top 10 stocks with the highest retail investors holding as of December 31, 2021, on the percentage basis, are as follows:

• Retail Individual investors is having the highest participation in Ujaas Energy with a 79.64% stake in the company which is being then followed by Syntex Industries wherein Retail Investors holds a 74.60% stake.
• In Reliance Capital and Urja Global, retail investors' holdings are 59.28% and 58.15% respectively.

What Should Investors Do?

In the past 1-2 years, Retail Individual Investors have emerged as strong participants in the stock market which has significantly nullified the impact of heavy Foreign Institutional Investors (FIIs) outflows in the recent past. But as talked about in the last section of the article, retail investors should carefully assess the corporate governance of a company and should keep this factor at top-most order while selecting a stock to invest in.

Disclaimer: The information here is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent are commendation to buy or sell stocks or MF.

Originally Published On: https://blog.investyadnya.in/how-individual-retail-investor-have-emerged-as-strong-participants-in-the-stock-market/