Retail investors are known for bearing the brunt of market sell-offs, often experiencing steeper losses compared to seasoned institutional investors.
An analysis of NSE500 companies reveals that stocks where retail investors hold at least 20% of outstanding equity have plunged 44% from their 52-week highs. In contrast, stocks with higher domestic institutional investor (DII) ownership have declined 34%, while those with high foreign holdings have seen an average drop of 29% during the same period.
For instance, stocks like Titagarh Rail Systems, Walchandnagar Industries, and Ideaforge Technology have corrected more than 60% from their 52-week highs, as the latest selloff spared even Dalal Street favorites. Retail investor holdings in these companies range between 26% and 42%.
| NSE500 companies with at least 20% holding |
Average fall from 52-week highs |
| High Retail Ownership | -44% |
| Domestic MF stake | -34% |
| High FPI Holding | -29% |
Source – Bloomberg
While the benchmark Nifty50 has declined 14.3% from its September peak, broader indices have suffered much steeper corrections. The Nifty Midcap index is down 20.4%, while the Nifty Smallcap index has plummeted 22.7% from their respective highs. Small-cap and mid-cap stocks are the most favored by retail investors, whereas foreign portfolio investors (FPIs) tend to prefer large-cap stocks.
Also Read: Last-hour sell-off drags Nifty index below 22,500 mark, midcaps shed more than 1%
According to Goldman Sachs, local headwinds are stabilising for Indian stocks, but volatility may remain high near-term given heavy ownership of small and mid-cap shares by domestic investors and lingering global uncertainty.
“While the worst seems to be behind us in terms of economic growth and earnings trajectory and prices have corrected meaningfully, we expect a gradual recovery in growth,” wrote Goldman Sachs in an investor note.
Meanwhile, foreign portfolio investors (FPIs) have been aggressive net sellers over the past five months, while DIIs have been absorbing the outflows. Since October last year, overseas investors have cumulatively offloaded $28 billion worth of shares on a net basis. The local investors have bought shares worth $42 billion during the same period.
The selloff by the overseas investors has wiped out $1.3 trillion from India’s market value, which stood at $4.5 trillion as of Monday’s close.
(Edited by : Poonam Behura)
