The daily average retail cash turnover in the first half of March has risen to Rs 8,000 crore, up 40% plus month-on month, evidence that small investors have become more active in the market. While the Sensex is at an all-time high — rallying since mid-February through March — it’s only now that participation from retail investors is picking up.
Experts say the recent rally in mid-cap stocks suggests that small investors are joining the party; in the last six weeks, the BSE mid-cap index has rallied 9.6%, almost matching the 10% increase in the Sensex.
Nearly half the constituents of the BSE mid-cap index have outperformed the Sensex, with as many as 42 companies, or nearly a fifth of the universe, gaining as much as 20% since February 13.
The markets have been driven by purchases of foreign institutional investors who have been buyers in 29 of the last 30 trading sessions and have run up a tab of $4.14 billion. At the end of December 2013, the average retail cash turnover was at a six-year low of R6,404 crore; that has now risen to R6,713 crore and as a share of the total cash turnover, has gone up to 49%. However, it is still way below the 72%-mark seen in CY11, when turnover touched R10,214 crore.
Indian equities scaled new highs on Thursday; the Sensex closed 94.54 points higher at 22,189.84 points while the Nifty ended the session 40.35 points higher at 6,641.75 points. On Thursday, FIIs bought another $363 million worth of equities, while the domestic institutional investors (DIIs) sold $98.13 million worth of equities.
Market observers feel the future trend of retail flows would depend upon the election results. “Typically, when markets touch new highs, retail players churn their portfolios, which is why we are seeing retail volumes improve. However, strong retail flows could return to markets after elections if a stable government comes to power,” said Rikesh Parikh, vice-president, equities, Motilal Oswal Securities.
“All-time highs have no significant meaning. Retail investors are not easily pleased with these milestones as the Sensex has gone absolutely nowhere in the last six years,” Saurabh Mukherjea, CEO, Institutional Equities, Ambit Capital, pointed out.