Friday, Dec 19, 2014

Market watch: Retail investors make guarded comeback on renewed confidence

Experts advise retail investors to not limit themselves to profit booking and shuffling portfolios, but be more active to benefit from any change in the business environment. Experts advise retail investors to not limit themselves to profit booking and shuffling portfolios, but be more active to benefit from any change in the business environment.
By: ENS Economic Bureau | New Delhi | Posted: April 28, 2014 8:56 am

LAST week little known Wonderla Holidays that came with its initial public offering (IPO) to raise up to Rs 180 crore witnessed a huge success with the overall subscription of 38 times and the retail subscription hitting over 7 times.

The last time an IPO received such interest from investors was the Punjab & Sind Bank issue in December 2010 that got a subscription of 50 times its issue size.

The response to the issue not only gives some indication of the return of general confidence but also shows retail investors’ willingness to participate in the market and not to get left behind.

The behaviour of retail investors in the past shows that they look for some certainty before they enter the market at the turn of cycle. While the foreign institutional investors are the first to do so and thereby lead the trend, retail investors are generally the last ones to come into the market. The markets have risen by 11 per cent over the last two months following net foreign institutional investors (FIIs) bringing in over Rs 29,000 crore since the beginning of calendar 2014.

The surge in markets over the last two months following expectations of a strong government coming to power in the ongoing general elections has lifted retail investor mood and their activity seems to have picked up.

Data available with the Securities and Exchange Board of India (Sebi) shows that the share of others (excluding FIIs, mutual funds, banks and proprietors) in the turnover in cash segment at National Stock Exchange has gone up over the last five months. While the share ranged between 43 per cent and 49 per cent from April-September 2013, it ranged between 52 per cent and 54 per cent in the five-month period from October 2013 to February 2014.

THEY ARE COMING IN

While the retail investors have been sitting on the sidelines for a longtime, brokerage houses say that there is a clear trend of retail investors now coming back to the market and not just for long-term investments but there has also been a steady rise in the number of retail investors entering the market with a short-term approach.

CJ George, chairman Geojit BNP Paribas Financial Services said that the brokerage firm has witnessed more than 50 per cent year-on-year increase in the number of investors trading on a daily basis. “There was no confidence in the markets over the last four years but now it is coming back. Investors are looking forward to May 16 when they expect the BJP-led coalition to get a strong mandate and form a stable government,” said George.

But retail investor behaviour seems to be more continued…

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