The recent bull run doesn?t seem to have inspired much confidence among retail investors who continue to take a cautious approach despite a host of reform measures initiated by the government and Sebi.
Initial analysis based on Capitaline data showed that 62 companies witnessed a sequential drop in retail shareholding (shares held up to R1 lakh). This accounts for nearly 61% of the 102 companies that have so far declared their shareholding pattern within the BSE-200 universe.
Further, retail investors continued to liquidate their holdings in the banking and financial services (BFSI) space. Barring HDFC Bank, ING Vysya Bank, M&M Financial Services and IFCI, all other companies within the BFSI space reported a drop in retail shareholding. Syndicate Bank witnessed the biggest drop (0.45 percentage points) followed by Federal Bank (0.35 percentage points).
Companies like ICICI Bank, SBI, Canara Bank, Axis Bank, Union Bank of India, HDFC, IDFC and Bajaj Holdings saw their retail shareholding decline in the range of 0.3 to 0.35 percentage points.
This comes at a time when market experts have highlighted several issues that are having a negative impact on retail investor participation, with lack of transparency and weak corporate governance the biggest challenges. They also point to factors like an inherent risk-aversion attitude of retail investors and good performance of other asset classes like real estate and gold.
Meanwhile, mutual funds, which are often looked upon as a proxy for retail investors, have seen large amount of redemption as small investors used the reform-related market rally as an opportunity to book profits and exit the market.
As per latest Amfi data, equity MF schemes witnessed outflows for the seventh consecutive month in December, with the last month of CY12 witnessing outflows worth R1,446 crore as long-term investors booked profits in September, October, November and December as the market continued its upward trajectory.
Metals and mining, automobiles, pharmaceuticals, IT and power generation & distribution were other sectors to see a drop in retail shareholding. Companies seeing declines include Tata Steel (0.23 percentage points), Sesa Goa (0.33 percentage points), Aurobindo Pharma (0.30 percentage points), Tata Motors (0.18 percentage points), NHPC (0.19 percentage points) and JSW Energy (0.17 percentage points).
