No longer just riding pillion, retail investors driving rally

The current rally is broadbased in more ways than one. For starters, it is not confined to any specific pocket of the Nifty leader-board. Additionally, it has unmistakable signs of wider retail participation — so much so that the climb of the last 2,000 points on the gauge may well have had a distinct ‘retail’ flavour.

That’s evident in the 15.2 million addition to the investor base since April 1. While there is no official data on direct retail flows, brokers said a decline in foreign and domestic institutional flows shows retail investors might have driven the rally.

The number of investor accounts surged to 70 million at the end of September 2021, according to NSDL and CDSL data. Foreign portfolio investors’ (FPIs) net investments were just Rs 13,500 crore during the last 2,000-point rally compared to an average of Rs 45,000 crore they invested in each of the previous five 1,000-point rallies.


Domestic institutions, which have invested about Rs 19,200 crore in the last 2,000-point rally, pumped in nearly Rs 53,000 crore since April 1, while FPIs sold shares worth Rs 21,000 crore. More than 5.8 million new demat accounts were created in the September quarter, indicating investors shifted their savings from traditional instruments such as gold, real estate, and FDs to stocks.

The pandemic has played a crucial role in the emergence of technology-savvy, discerning investors, and now there is renewed vigour and surge in market participation by retail investors, said brokers.

“More and more investors now understand the importance of investing in markets for long-term wealth creation but at the same time, want to make informed decisions by doing their research or seeking expert help,” said B Gopkumar, CEO, Axis Securities.

“Another trend that we have observed is that more millennials are entering the markets. They are serious about money management, which is encouraging, given that an early start will help them fulfil their financial aspirations,” said Gopkumar.

Retail investors are buying and selling shares through their mobile phones like never before. The average daily turnover through mobile trading in shares on the NSE jumped to a record 20.44% of the total turnover on NSE compared to 10% two years ago.

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