© Reuters.
Retail investors’ direct stakes in NSE-listed Indian companies reached a record high of 7.62% in Q3 2023, reflecting growing interest in equities amid India’s robust economy, according to Prime Database. Retail investors made purchases worth ₹7,596 crore. High Net Worth Individuals (HNIs) also increased their investments, with their stakes hitting 2.05% by September 30, 2023. This surge led to a combined share of retail and HNI (NYSE:) holdings reaching a record 9.68%.
However, the holdings of Domestic Institutional Investors (DII) slightly receded during the same quarter. The gap between Foreign Portfolio Investors (FPI) and DII holdings shrank to an all-time low, indicating increased participation from local institutions such as mutual funds and insurance companies. The DII-to-FPI holding ratio hit a record low of 13.11%.
This growth in retail participation was triggered by Covid-induced lockdowns and low-interest rates since March 2020, which led to a rise in demat accounts from 4.09 crore in March 2020 to 13.23 crore by October 2023.
Simultaneously, promoters’ stakes fell to a four-year low of 41.55%, driven by stake sales during a record-breaking run in the stock market and lower promoter holding in newly listed companies due to increased institutional participation. Despite this decrease, DII holdings crossed ₹50 lakh crore.
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