In line with the surge of retail investors into the stock markets in the quarter ended June 2020, the retail holding in NSE-listed companies went up from 6.54 per cent in March to 6.74 per cent as on June 30, 2020 — highest in 10 quarters.
During the June quarter, which witnessed 20 per cent jump in Nifty, retail investors raised their holding in 1,018 companies listed on the National Stock Exchange (NSE).
According to Prime Infobase, the retail holding (investors with holding of up to Rs 2 lakh) went up even as the domestic mutual funds (MFs) and foreign portfolio investors (FPIs) saw a dip in their share of holding.
Domestic MFs saw their share decline for the first time in 24 quarters on a quarter-on-quarter basis. While the share of MFs holding in NSE listed companies increased from 2.86 per cent in June 2014 to 7.96 per cent in March 2020, it dipped for the first time (in six years to) over the previous quarter and stood at 7.81 per cent as on June 30, 2020.
The FPIs’ holding in NSE-listed companies decreased from 21.17 per cent by value as on March 31, 2020 to 21.05 per cent as on June 30, 2020, despite net inflows of Rs 29,516 crore during the quarter.
The jump in retail investor numbers can also be seen from the rise in demat accounts over the last four months. In the three month period — April, May and June — the Central Depository Services Limited added 19 lakh new investor accounts. Even in July, it added 10 lakh new accounts the investor account numbers rose to 2.41 crore as of July 31, 2020.
“Unlike seen in previous quarters and years where retail would typically buy at the peak and sell at lows, the last quarter saw heavy buying by retail making use of the steep fall in share prices due to the coronavirus pandemic,” said Pranav Haldea, MD of Prime Database. He further pointed out that retail investors have an overwhelming presence in smaller companies, which institutional investors typically stay away from.
Besides retail investors, even the holding of high-net-worth individuals (those with more than Rs 2 lakh shareholding), increased in NSE-listed companies as it rose from 1.78 per cent to 1.84 per cent as on June 30, 2020.
Even the private promoters continued to increase their holding and raised their holding in NSE-listed companies from 44.25 per cent in March 2020 to at 44.43 per cent as on June 30, 2020. Data shows that over 11 years (since June 2009), private promoter ownership has been steadily increasing and has increased from 33.61 per cent on June 30, 2009 to 44.43 per cent on June 30, 2020.
On the other hand, the percentage holding of Government of India (as promoter and public shareholder) in companies listed on the NSE hit an all-time low of 6.36 per cent as on June 30, 2020 down from 6.56 per cent as on March 31, 2020.
Over the same 11-year period, the holding has been steadily declining, from 22.71 per cent as on June 30, 2009 to 6.36 per cent as on June 30, 2020, “partly also due to the Government’s divestment programme,” said Haldea.
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