Retail Stock Ownership At 14-Year High
The clout of Indian retail shareholders has risen. Individual retail ownership of shares listed on the NSE hit a 14-year high in December 2021, according to NSE's India Ownership tracker.
Direct retail shareholding stood at 9.7% at the end of December—a 0.5% increase in five years. Add domestic mutual fund ownership at 7.4% and retail shareholders held, directly and indirectly, a total 17.1% of the NSE-listed universe in December 2021, compared with 13.9% in December 2016.
In terms of floating stock, that is proportion of shares held by retail and domestic mutual funds as a percentage of shares held by non-promoter entities, direct and indirect retail ownership stood at 34.6% compared with 31.2% in the last two years.
While financialisation of savings has been a growing trend in India, it accelerated during the pandemic as a rebounding market, pressure on incomes and work from home all combined to push more Indians towards investment in equities than ever before in such a short period.
Just in the 12-months ended December, 3 crore new investor accounts were opened compared to little over 1-crore during the year-ago period. That took the total investor accounts to over 8 crore at the end of December 2021. Since then, investor accounts have crossed 10 crore as of March 2022.
India had a little over 8 crore PAN-based unique investors at the end of March 2022 compared to more than 5 crore in October. To be clear, a PAN card holder can have multiple investor accounts to deal in equities, gold or mutual funds.
The exit of foreign investors this year has further boosted retail holdings. According to Morgan Stanley, in the January-March quarter, foreign portfolio investors' ownership of a sample of 75 companies fell 75 basis points versus the previous three months, whereas domestic investor holding rose 81 basis points.
If the trend persists, domestic investors, at 18%, are set to become the largest holders of Indian equities over FPIs for the first time since 2010.
Retail Inflows
According to data available on the NSE:
Ten of the 11 months in FY22 witnessed net inflows by retail investors. The cumulative net inflows for the 11 months amounted to Rs 1.57 lakh crore. This is nearly 2.5x of the net inflows during the same period in fiscal 2021. Data for March 2022 is yet to be released.
Retail investors contributed Rs 44,400 crore of net inflows into the equity derivatives market in the 11 months of fiscal 2022 compared with Rs 44,300 crore in the period in fiscal 2021.
In total, net direct retail inflows into equity and equity derivatives market stood at close to Rs 2 lakh crore during the period.
In FY22, over Rs 1.24 lakh crore was invested in the domestic mutual fund through SIPs alone, with total asset under management under SIPs at Rs 5.76 lakh crore, according to AMFI. Total net inflows from SIPs stood at Rs 96,080 crore in fiscal 2021, with AUM under SIPs at Rs 4.76 lakh crore.
Together, India's stock market got an average of Rs 24,545 crore or $3.2 billion in monthly inflows from retail investors directly into cash market and indirectly from domestic mutual funds in FY22, according to BloombergQuint's calculations. That compares with an average Rs 13,580 crore for the last fiscal.
To be clear, this does not include flows through portfolio managers and alternate investment funds.
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