The number of registered investors with the BSE jumped nearly 50 lakh or 14.22 per cent over the past year to cross the 4-crore mark in August 2018 thereby underlining the fact that rise in domestic participation is one of the biggest factors supporting the recent rally in equity markets.
According to the data available with BSE, registered investors or clients (direct equity investors and mutual fund investors using BSE platform) stood at 4.01 crore as on August 24 following the addition of 49,95,854 investors over the last one year.
Between June 2017 and June 2018, the mutual fund industry witnessed a sharp rise in addition of folio numbers in equity oriented schemes. According to data sourced from Association of mutual funds in India (AMFI), total folios in equity oriented schemes rose from 4.29 crore to 5.61 crore. Within this, retail investor folios has risen from 4.14 crore in June 2017 to 5.38 crore in June 2018.
The biggest addition in registered investors has been in Maharashtra, where over 10 lakh clients (13 per cent) were added in last one year, followed by Gujarat which added over 8 lakh investors, a growth of 15.65 per cent. Uttar Pradesh (3.4 lakh), Tamil Nadu (3.34 lakh) and West Bengal (3.01 lakh) occupied the next three positions. Delhi added 2.64 lakh investors.
Among the states with over 5 lakh registered investors, Odisha, Bihar and Haryana witnessed the highest growth rate. While Odisha saw a 21.8 per cent jump, Bihar and Haryana grew at 19.7 per cent and 16.1 per cent, respectively.
While rise in equity markets improves investor sentiment and draws fresh investors, experts say that the entry of retail investor (either direct or via mutual fund route) also provides stability to the market and acts as a counter balance to the outflow of funds by foreign portfolio investors.
Between August 2017 and July 2018, the net inflow into equity schemes of mutual funds amounts to a high of Rs 1,56,687 crore. In the same period, FPIs have pulled out Rs 11,428 crore from the Indian equities. So, the domestic mutual fund and stock market investors have not only balanced out the FPI outflows but have pumped in a significant corpus that has lifted the markets to new highs.
Over the last one year, the Sensex has grown 21.2 per cent mostly on the back of the strong investment by domestic retail investors either through mutual funds or directly in stock market.