Individual investors, HNI holdings in equity fall to 5-year low

The share of individual investors including High Net Worth investors in NSE listed companies declined to a 5-year low of 9.11 per cent as on March-end, down from 9.28 per cent as of last December, as per primeinfobase.com data.

Instead of venturing to invest directly, retail investors and HNIs have taken the Mutual Fund route to tap the equity markets.

While the share of retail investors came down from 7.25 per cent to 7.12 per cent, the share of HNI investors decreased from 2.03 per cent to 1.99 per cent during the quarter. Individual investors were net sellers to the tune of ₹13,134 crore in the March quarter.

The share of Domestic MFs, through which mostly individual investors invest indirectly, reached yet another all-time high of 11.46 per cent in March quarter against 11.10 per cent in December quarter, the eleventh consecutive quarter of increase.

Pranav Haldea, Managing Director, PRIME Database Group said this trend is an indicative of growing maturity of individual investors who are now increasingly preferring to invest through a professional fund manager via MFs rather than investing in stocks directly.

In March 2012, the share of MFs was 3.21 per cent while the share of individual investors was 8.51 per cent but in 14 years the trend has changed with individual investors share remaining broadly the same at 9.11 per cent, while MFs share skyrocketing to 11.46 per cent.

Meanwhile, FIIs share further declined to a 14-year low of 16.13 per cent from 16.60 per cent in the same period. MFs have continued to narrow the gap with FIIs with the gap in their share declining by a huge 83 basis points in the quarter under review to reach just 4.67 per cent.

The gap has nearly halved in the last two years alone from 9.34 per cent as of December, 2023. At its peak, the gap was 17.14 per cent on March, 2015 with FII share at 20.70 per cent and MF share at just 3.56 per cent.

The share of Domestic Institutional Investors also reached yet another all-time high of 19.24 per cent from 18.72 per cent with a net investment of Rs 2.51 lakh crore during the quarter. Apart from MFs, banks and AIFs also played their part with net buy of ₹28,784 crore, Rs 1,621 crore and Rs 512 crore respectively during the quarter.

The share of private promoters decreased to a 9-year low of 40.58 per cent as of March-end. Over the last 4 years alone, their share has fallen by a huge 464 basis points from 45.22 per cent on December 31, 2021. While ‘Indian’ private promoters share has gone down from 36.81 per cent to 32.12 per cent, ‘foreign’ promoters’ share has gone up marginally from 8.40 per cent to 8.46 per cent during this period.