The recent fall in the market has reached retail investors. His favorite shares have declined the most compared to foreign investors and other investors such as domestic institutions.
According to Bloomberg data, the NSE 500 (including large, mid and smallcap companies) shares that have more than 20 percent stake of retail shareholders have fallen by 45 percent of their 52 -week high levels. At the same time, shares with more than 20 per cent stake share of domestic institutional investors (DIIs) have fallen by 34 per cent, while global funds with such stake have fallen by 29 per cent.
During this period, the major Indian index Nifty-50 and Sensex declined by 14.3 per cent and 13.6 per cent from their last high levels. The midcap and smallcap index are near the recession after breaking up about 20 per cent from their high levels.
According to Ajit Mishra, Senior Vice President (Research) in Railor Broking, the huge loss of retail investors can be largely due to selling, margin calls and lack of institutional support. He believes, “In contrast, strong DIIs and foreign institutional investors owe shares perform better as institutional investors shop during the decline.”
Smallcap has declined much, in view of this, retail investors also did not stop shopping fiercely. The investment of retail investors in smallcap companies until the October-December 2024-25 quarter was more than Rs 10.3 lakh crore, the highest after the promoter category.
According to Chokalingam ji, founder and research head of Equinomics Research, most investors are affected by the sharp speed in the fast market. This trend has been seen in various market cycles globally, which affects both high-quality and substandard shares.
He believes that historically there is a possibility of more damage to retail investors during every market decline. This is because in many cases the evaluation is increased, benefits and growth are weak, businesses lack stability and companies have operations related problems. Chokalingam said that when there is a widespread improvement in the market, good quality shares usually fall down less than weak quality shares.
Foreign investors hold 21.36 percent in the smallcap category (which does not include 100 large number of share shares and subsequent 150 midcap shares) while domestic institutions account for 24.95 percent. According to Priminfobes.com, small investors have a stake of about 26.56 percent, which is the highest level so far.
Market strategy
Regarding the current market decline, Kranti Bathini, director of the equity strategy in wealth security, says that the improvement in these shares depends on what kind of shares the retail investors have.
He said, “Finally, share prices depend on income.” If income estimates are positive then there is a possibility of surge in share prices. However, if the possibility of income is not clear then retail investors should carefully assess their situation. For traders, he needs to set stop-loss levels as important risk management strategy
Insisted.
First Published – March 13, 2025 | 9:52 pm IST