With uncertainty and volatility ruling the markets for most part of 2012, retail investors made a quiet comeback with ‘safe’ investments such as fixed income instruments. However, equity participation did manage to play catch up post the market rally in September following the slew of Government reforms and change in the Finance Ministry portfolio, said market experts.
V. Krishnan, President, Integrated Enterprises, said: “This year was ruled by fixed income securities, corporate debt, corporate bonds and funds such as income funds and capital protection funds while equity lost favour with retail investors.
“Post September, there has been a mild recovery and if the present market consistency and stability with a positive bias continues, investors would come back to equity in 2013. Given that the present rally is happening after a long time, we are witnessing unusual redemption pressure in equity mutual funds and direct equity but this pressure is likely to subside as the market stabilises.”
Participation up 15%
“From third quarter, retail participation in broader markets was up by almost 15 per cent thanks to market momentum,” added Rikesh Parikh, Vice-President, Market Strategy and Product Development-Equities, Motilal oswal Financial Services.
In the primary market, while certain IPOs such MCX, CARE and P.C. Jeweller did manage to rake in a decent retail investor subscription, they were conspicuous by their near absence from Bharti Infratel which managed to garner retail participation of just 10 per cent. Valuations and good company fundamentals continued to remain the key deciding factor, according to experts.
Lack of awareness
Despite the market regulator SEBI introducing a new dedicated window of Offer-for-Sale for diluting promoter’s stake this year, the retail participation remained largely lukewarm baring a few exceptions. Market watchers, however, partly attributed this to lack of investor awareness.
Going forward, equity analysts believe, 2013 could see retail participation in equity go up subject to certain conditions.
Head of Broking, Kotak Securities, B. Gopkumar said: “Besides waiting for a sustained bull run, investors would return to the markets only if there is a fall in interest rates with return on fixed deposits falling to 7-7.5 per cent level.
“Primary market revival will also play a huge role in attracting new set of retail investors in the secondary market. Post Coal India, the market has not seen a credible large issue which is crucial for the growth of the market. ”