It's return of the retail investor on exciting valuations

Retail investors are returning to the stock markets, slowly and steadily. The NSE now has 46 lakh active investors in the cash market segment — a 6 per cent increase over the last year.

On the BSE, the total registered investor base crossed the 3-crore mark on January 15. According to the BSE website, it has 3.02 crore registered users currently.

Not just direct investment, investors are also dabbling in mutual funds. According to a CRISIL study, retail investors have helped mutual funds close 2015 with their highest-ever folio count of 4.59 crore, a growth of 13.84 per cent over 2014.

According to the NSE, these active clients have traded at least once on the exchange in 2015.

While additional participation has come from the western region of the country, cities such as Bengaluru and Rajkot have also shown significant growth, the NSE added.

State-wise, Maharashtra had the highest number of active investors, followed by Gujarat, West Bengal, Tamil Nadu and Karnataka.

NSE’s Business Development Chief Ravi Varanasi said the exchange has “constantly reached out to people across India, with an aim to bring more people into the formal financial system.”

Most analysts welcome the increase in retail investor participation. According to them, credit must go to the exchanges, fund houses, SEBI and other intermediaries that embarked on a major investor education programme in the last couple of years, which has resulted in the surge in investor participation.

“Despite the growth of the retail investor base, the number looks very small, given the country’s young working population,” said an investment advisor based out of Mumbai. He added: “…still (have) a long way to go on this front.”

Ramesh Chordia, independent analyst and share dealer, feels investors have matured slightly more this time around. “Despite a sharp fall in the valuation of most stocks, we did not see any panic from retail investors,” he added. “Some of them, to our surprise, are asking for value-buying stocks. Hope this trend sustains,” he said.