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Thursday, July 09, 2020

Retail investors shrug off market volatility, invest in blue chips

Retail holding in companies listed on the NSE went up during the quarter from 6.42 per cent in December 2019 to 6.55 per cent as on March 31, 2020.

Written by Sandeep Singh | New Delhi | Published: June 25, 2020 3:00:05 am
Retail market, Retail market investors, Retail market volatility, Retail market news, Retail market coronavirus impact Retail holding in companies listed on the NSE went up during the quarter from 6.42 per cent in December 2019 to 6.55 per cent as on March 31, 2020. (File Photo)

Taking the sharp fall in markets in the quarter ended March 31, 2020 as an opportunity to invest, retail investors rushed in huge numbers to buy piece of bluechip companies. The 10 companies that witnessed the highest addition in shareholder numbers during the quarter added an aggregate of nearly 30 lakh investors in the companies. The names include — State Bank of India, Reliance Industries, HDFC Bank, ICICI Bank and ITC among others.

Data sourced from nseinfobase.com shows that while SBI added 5.89 lakh retail investors in the quarter, HDFC Bank added 3.78 lakh investors. Reliance Industries and Tata Motors added 3.13 lakh and 2.53 lakh respectively. ONGC (2.13 lakh), ITC (2.11 lakh), ICICI Bank (1.96 lakh) too added significantly. Besides these, Yes Bank and Vodafone Idea that witnessed a sharp fall in their share prices on account of business concerns relating to the company, also witnessed huge inflow of retail investors and the two companies added 3.78 lakh and 2.08 lakh retail investors.

Retail holding in companies listed on the NSE went up during the quarter from 6.42 per cent in December 2019 to 6.55 per cent as on March 31, 2020.

RIL, which added 4.2 lakh investors in the year ended March 2020, witnessed net investor addition for the first time in 10 years. The company, which had saw a decline in its investor base from 35.62 lakh in the year ended March 2010 to 22.11 lakh in the year ended March 2019, saw it rise to 26.32 lakh at the end of March 2020.

Pranav Haldea, MD, Prime Database, said retail investors generally are not the most prudent investors. Stating the retail holding in penny stocks is three times more than FPIs that retail investors mostly fall for the wrong stock. Stating that the retail holding in penny stocks is three times more than FPIs, Haldea said, “Unlike FPIs who cut losses and exit from a company that is on a decline, retail investors tend to hold it in the hope that someday it will rise. When the price of a stock starts falling, while existing retail investors try to average out their holding, new investors get in to time the stock for quick gains and more often they end up with losses.”

Reliance Power and Reliance Communications are among the top 10 companies that have highest number of retail investors. Reliance Power is on top with over 30.61 lakh retail investors and is followed by RIL that has 25.41 lakh retail investors. Market players say while retail investors entered the two companies when they were doing fine, they failed to exit when the tide turned, even as other investors including DIIs and FPIs exited them.

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