MUMBAI
:

Individuals who invested up to 10,000 in the stock market made up a third of the entire investing community, including institutional and non-institutional, November data from National Stock Exchange (NSE) showed, even as their contribution to the turnover remained fractional.

The data, considering so-called active investors who invested at least once a month, shows how an increasing number of small investors has been crowding the market bandwagon and investing part of their investible surplus in stocks in the past few years since the pandemic years of 2020-21 and 2021-22.

 

Understandably, the value of trades of those investing less than 10,000 totalled 530 crore, or just 0.04% of the share of total turnover of 14.82 trillion, accounted for by all investors—institutional, proprietary, retail, high-net-worth individuals (HNIs) and corporate, NSE data showed.

A total of 10.7 million investors were active on the country’s largest exchange, accounting for 93% share of the capital markets segment turnover, with BSE a distant second.

 

Interestingly, those trading between 10,000 and 1 lakh stood at 36.5% or 3.91 million investors, showed NSE data, the largest category of active investors. But, in terms of turnover , they too accounted for a mere 0.5% of total turnover or 7,450 crore.

The category between 1 lakh and 10 lakh was the third-largest at 2.32 million, which accounted for 38,800 crore or 2.6% of turnover .

The Securities and Exchange Board of India (Sebi) categorizes retail investors as those investing up to 2 lakh in an initial public offering, and those above that threshold as HNIs, including resident individuals, non-resident Indians, Hindu Undivided Families, corporates, academic institutions, societies and trusts.

Interestingly, all three categories of investors—below 10,000 , 10,000-1 lakh and 1-10 lakh—accounted for more than 91% of all investors who traded less than 10 lakh on a cumulative basis during the month. Their combined share as a percentage of total turnover was a mere 3.1%.

The count of the biggest investor category that invested above 10 crore each was the smallest at 16,103. But, at 11.06 trillion, they accounted for 74.6% of the total turnover of 14.82 trillion, the data showed.

According to analysts, the count of the middle class deploying a part of their savings in the stock markets coincided with post-pandemic investor awareness programmes like ‘Mutual Fund Sahi Hai’ run by industry body Association of Mutual Funds in India, and broker-offered systematic investment plans (SIPs) running parallel to the SIPs offered by mutual funds.

This is borne by SIPs as a medium of investment increasing from 7,000-8,000 crore a month in 2020-21, just after the onset of the pandemic, to 17,000 crore a month in 2023-24. SIP assets under management run by mutual funds have swollen to 9.3 trillion in 2023-24 (Apr-Nov) from 6.83 trillion in the previous fiscal.

“The numbers indicate a growing presence of small, middle-class investors post the pandemic,” said Alok Churiwala, managing director, Churiwala Securities. “Though their investments are a trickle of the overall turnover, I expect the numbers to swell as more people jump on to the bandwagon for generating inflation-beating returns.”

Churiwala said the disproportionate share of institutional and ultra-HNI investors would continue to grow and termed it “normal”.

Sudhir Joshi, executive director, Khambatta Securities, said the smaller investments reflected the “lack of experience” of small investors who trade small quantities of shares via SIPs through mutual funds or brokerage houses. He added though that their count would grow with the market yielding robust double-digit returns since Nifty’s pandemic lows of 7511 points.

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