Uncover the Shocking Moves of Retail Investors and HNIs After the August 5 Stock Market Crash | Exclusive Market Insight

Kotak Report Highlights Resilience of Indian Retail Investors Amid Market Turmoil

Amid recent market volatility, a Kotak Institutional Equities report indicates that non-institutional investors in India remain undeterred. Motivated by high returns and seemingly immune to fear, these investors have largely ignored recent negative trends, including potential US economic slowdown, Israel-Iran tensions, and the yen’s appreciation.

"Recent negative news may not significantly affect the confidence of non-institutional investors," stated Sanjeev Prasad, co-head of KIE. Indian retail and high net-worth individuals (HNIs) have been tactically buying during market dips, such as those spurred by election results and increased capital gains tax.

Data from PRIME Database shows retail investors’ share of the market reached a historic high of 7.64% by June 2024, up from 7.52% in March. However, HNIs’ holdings dipped slightly from 2% to 1.98%. Combined, the retail and HNI shareholding climbed to 9.62% from 9.52%.

Contrarily, foreign institutional investors (FIIs) have reduced their stake to a 12-year low of 17.38% as of June 2024, selling substantial holdings during market upheaval. Meanwhile, domestic institutional investors (DIIs) increased their share to 16.23%, narrowing the gap between domestic and foreign holdings.

Prasad noted that while benchmark indices like BSE Sensex and NSE Nifty50 are reasonable by historical measures, many non-financial Nifty-50 stocks are trading at expensive multiples. Persistently negative news could lead some investors to book profits in less substantiated stocks to protect gains from the past few years.

On August 5, the Sensex plummeted by 2,686 points or 3.3%, while the Nifty50 fell below 24,000. Analysts expect market rotation towards high-quality, growth-oriented companies and advise focusing on large-cap stocks for stability, without completely overlooking sound mid and small-cap companies.

Fisdom Research suggests that historically, markets have delivered positive returns post a 3% fall, with significant gains lingering in the longer term.

"Despite short-term volatility, a long-term strategy focusing on quality and growth likely yields better results," emphasized Fisdom.

Original Story https://www.business-standard.com/markets/news/what-will-retail-investors-hnis-do-after-the-august-5-stock-market-crash-124080600343_1.html
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