Retail investors in India have not been chasing penny stocks in pursuit of sudden wealth and their median ticket size is less than Rs 50,000, according to a study.
“Illustratively, over 80% of (retail) investors had net investment of less than Rs 50,000 over an entire year,” according to the study, ‘Market Concentration and Retail Participation in India’, by the National Stock Exchange economics team.
An analysis of this study by the Business Standard said the figure is significant, considering the fact that net investment by the retail segment has soared to ₹ 86,000 crore this year from Rs 51,200 crore in 2020.
Small investors accounted for 9.4% of the stocks in NSE, as of September 2021, according to the Business Standard.
The share of foreign institutional investors (FIIs) is 21% and of domestic institutional investors 13.4%, it added. Retail investors stayed put in the market in the past two years, according to the analysis.
Another takeaway is that retail investors have limited their preference to better quality stocks. The NSE team has studied “concentration” in the market. Concentration is the degree to which a market participant’s portfolio is limited in the number of stocks held. Lower the number, higher is the concentration.
The small investors have not fared poorly, said the Business Standard analysis, adding that their stocks have been steady. Small investors with the largest number of stocks in their portfolio may not have the means to analyse it, but they make it up by being cautious, it said.
Another finding of the NSE study is that small investors are trading in the higher value stocks than in the relatively illiquid scrips, according to the publication.
“It is not a bad performance from retail investors, which gives credence to the belief that the markets may be generating steady profits for a larger middle-class population than before,” says the analysis of the NSE study.