Markets
Savvy small investors score a quiet poll win
Summary
- Retail investors were net buyers of ₹47,180 crore worth of shares in FY24 and ₹49,206 crore in FY23, NSE data shows
Mumbai: Retail investors, who buy and sell shares directly, are getting smarter. In a rare instance, they outsmarted domestic and foreign investors in trading strategy in the run up to and on election results day on 4 June. Retail investors include individuals, Hindu undivided family, NRIs, proprietorship and partnership firms, and limited liability partnership firms.
When the exit polls on Saturday, 1 June predicted a landslide victory for the BJP-led NDA, the markets closed higher by 3.25% on Monday 3 June, fuelled by foreign portfolio investor or FPI inflows of ₹6,617.32 crore and mutual fund purchases of ₹3,072.85 crore, NSE data reveals.
However, retail investors net sold shares worth ₹8,587.5 crore on 3 June instead of their usual practice of buying on the rise.
The next day, when the actual counting showed the BJP unable to secure a simple majority, the market tanked almost 6% to 21,884.50, and FPIs and MFs net sold shares worth a combined ₹18,760 crore.
Read this: Sell sell? Why the market doesn’t like the poll results
Again, retail net purchased shares worth ₹21,178.94 crore , the data shows, staying true to the adage of buying on a low.
“Direct retail tends to enter last and exit first, so this is a sea change to see them execute a smart strategy , outplaying MFs and FPIs," said S.K. Joshi , executive director of Khambatta Securities.
Agreed Alok Churiwala, managing director, Churiwala Securities, who said that retail investors now included “a smarter and younger lot who are more adept at investing than the typical retail investor of the previous decade and earlier".
On smaller rival BSE, too, direct retail purchased a net ₹1,656.53 crore on Tuesday and sold ₹2,245 crore over the next three days.
The smart investor
It is well known that markets recovered from Wednesday as it became clear that Narendra Modi would lead the national democratic alliance (NDA), which had won 290 seats, to form the new coalition government at the centre.
The Nifty has rallied 6.4% to a new closing high of 23,290.5 from Tuesday through Friday, potentially giving stellar returns to retail investors.
The category-wise turnover for 5-7 June was unavailable on NSE at the time of writing, but analysts believe that retail investors could be sitting on significant profits if the shares they purchased multiplied by value.
Also read: Will markets' focus turn to earnings, finally?
Churiwala said that data release by the exchanges would reveal whether retail investors had booked profits in the rest of the week when markets rose on fresh buying and short covering of derivatives bets by FIIs.
Retail investors were net buyers of ₹47,180 crore worth of shares in FY24 and ₹49,206 crore in FY23, NSE data shows. FIIs were net buyers of ₹2.08 trillion in FY24 and net sellers of ₹37,632 crore in FY23. The figures for DIIs, including mutual funds, stood at (net buys of) ₹2.09 trillion (FY24) and ₹2.56 trillion in the preceding fiscal.
