scorecardresearchFewer active investors even as benchmark indices hit record highs: Report

Fewer active investors even as benchmark indices hit record highs: Report

Updated: 25 Nov 2022, 09:52 AM IST
TL;DR.
The uncertain economic environment, lacklustre one-year returns, and diminishing retail euphoria have weighed on market participation, industry players told BS.
The uncertain economic environment, lacklustre one-year returns, and diminishing retail euphoria have weighed on market participation, industry players told BS.

The uncertain economic environment, lacklustre one-year returns, and diminishing retail euphoria have weighed on market participation, industry players told BS.

The active investor count has seen a sustained decline since June, even as the benchmark indices have jumped more than 20 percent to log fresh lifetime highs, a report by Business Standard stated. 

The uncertain economic environment, lacklustre one-year returns, and diminishing retail euphoria have weighed on market participation, industry players told BS.

In June, the active client count at the NSE -- the country’s largest stock exchange -- stood at 38 million. At the end of October, the figure declined by 1.3 million to 36.7 million, the report quoted data provided by brokerage house CLSA.

Typically, in an upward-trending market, activity picks up. Last October, when the Sensex and the Nifty hit lifetime highs, the active client count had been doubling year-on-year. At the end of November 2021, the active client count was 29.9 million, informed the report.

However, this time, though activity is still higher than when markets hit all-time high last time, YoY growth has slowed to 30 percent, the report pointed out.

An active client is one who has initiated trade in the past 12 months.

“Last October and November peaked in terms of market activity. The entire market was doing well when the indices were near all-time highs. Now, only a few stocks have moved the market up. The outlook depends on how the markets do. If the market remains flat, activity will remain low,” said Nithin Kamath, Founder & CEO, Zerodha, the country’s largest brokerage.

While the markets are up sharply from this year’s lows, returns on a one-year basis are still poor. Also, last year, the markets were largely upward trending. By comparison, this calendar year has witnessed sharp ups and downs. According to broking industry officials, volatility discourages small investor participation, explained the report.

“The markets were volatile during the initial seven months of this year. And retail investors don't trade much when there is heightened volatility,” said Prakash Gagdani, CEO, 5Paisa.

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First Published: 25 Nov 2022, 09:52 AM IST