Retail investor participation in shares declined to a 24-month low in April amid a surge in demat account openings to a record high during the month, reported Economic Times.
Brokers said the continued drop in retail trading in shares has been because of losses in mid and small-cap shares and the rebound of fixed income as an asset class.
In April, 67 lakh unique retail investors participated in the cash market on the NSE out of the total demat account base of 11. 61 crore. This represents about 5. 8% of the total demat accounts in the country.
Unique retail investor participation is calculated on the basis of the PAN or Permanent Account Number. This is a more accurate indicator of investor participation as the total demat account base includes multiple account openings by investors.
“The subdued primary market, dismal performance of smalland mid-cap indices, and rising rate of interest in the economy in the last24 months have contributed to the declining retail investor’s base,” said Jimeet Modi, founder, SAMCO Group. “The fixed income instruments, considered safer, have become more lucrative than before, causing lack of interest and sluggishness in retail activity.”
The previous low in unique retail investor participation was 69.22 lakh in April 2021. Between October 2021 and April 2022, more than a crore unique retail investors participated in the cash market segment.
The primary market has been subdued so far in 2023, with five companies raising ₹5,824 crore through initial public offerings. In 2022, 40 companies raised ₹59,302 crore.
Unique retail participation in futures trading has declined to over a 15-month low, with 1. 14 lakh in index futures and 1. 76 lakh in stock futures. The number of unique investors trading in index options was 27. 73 lakh, a decline of10% over the previous month.
Since October 2021, smaller stocks — popular among retail investors — have remained sluggish. The BSE mid-cap and small-cap indices have returned 4% in this period. This slowdown in the broader market has also resulted in the loss of investor interest and a decline in retail activity, said brokers.
