Retail participation in stock markets at highest ever; MFs, insurance register a dip

In yet another sign of increasing retail participation in the stock markets, latest data shows that the quantum of retail holding in NSE-listed companies has crossed the 7% mark for the first time ever in the quarter ended June 2021.
According to data from Prime Database, the holding of retail investors – defined as those whose shareholding value is up to Rs 2 lakh – touched an all-time high of 7.18% in the June quarter. This was pegged at 6.96% in the quarter ended March 31, 2021.

In value terms as well, retail holding touched a new high of Rs 16.18 lakh crore from the previous quarter’s Rs 13.94 lakh crore – an increase of 16% even as the benchmark Sensex and Nifty rose by 6.01% and 7.02%, respectively during the period. Pranav Haldea, Managing Director, Prime Database, attributed the rise to the combination of a buoyant secondary market and a slew of new public issues that attracted a lot of retail savings to the stock market.

Meanwhile, the total stake of high net worth investors – individuals with a stake valued in excess of Rs 2 lakh – in the NSE-listed companies rose to 2.10% as on June 30, 2021, from 1.98% on March 31, 2021. On a different note, with many new investors coming to the stock markets directly, the holding of mutual funds saw a dip for the fifth consecutive quarter with the cumulative stake of MFs pegged at 7.25% in the June quarter, which was marginally lower than the previous quarter’s 7.26%.

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Incidentally, the dip in the last five consecutive quarters has come on the back of 24 successive quarters of rise in the stake held by mutual funds – it rose from 2.80% in the March 2014 quarter to 7.96% in the March 2020 quarter.
In absolute value terms, however, the holding of mutual funds went up by 12.30% in the June quarter to touch an all-time high of Rs 16.33 lakh crore, primarily led by the rise in stock prices.

Similarly, the share of holding of LIC – along with insurance companies as a category - also dipped in the June quarter even as the value saw an increase. LIC’s holding across 295 companies where its stake is more than 1% dipped to 3.74% in the June quarter from 3.83% in the previous quarter while the cumulative value of its holding increased to an all-time high of Rs 8.43 lakh crore as on June 30, 2021.

The stake held by insurance companies as a category also declined to a five-year low of 4.89% in the June quarter from 5.06% as on March 31, 2021. The value, however, rose by 8.77% to an all-time high of Rs 11.03 lakh crore as on June 30, 2021.

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