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Business News/ Market / Stock-market-news/  Retail investors seen returning to equities
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Retail investors seen returning to equities

Firms start hiring to meet rising demand as average daily turnover by retail investors rises to Rs12,475 crore in June

The Sensex rose 20.8% between 1 January and 7 July, the highest among the major emerging markets in the world. Photo: APPremium
The Sensex rose 20.8% between 1 January and 7 July, the highest among the major emerging markets in the world. Photo: AP

Mumbai: Prashant Thakkar proves the rule that retail investors invariably enter the stock markets when they are peaking (or have peaked).

India’s benchmark index, BSE’s Sensex rose 20.8% between 1 January and 7 July, the highest among the major emerging markets in the world. On Wednesday, the Sensex fell 0.54% to 25,444.81points.

Thakkar has, like many other retail investors, entered the market because he sees the Indian economy reviving under a new, business-friendly government. The 36-year-old businessman has stayed away from the stock market for more than a year.

“It seems good times have come back. I am more confident about this government doing a good job and bringing the economy back on track, and consequently, the market should give us good returns," said Thakkar who has largely invested in the stocks of state-owned companies.

Indeed, retail turnover in the cash segment of Indian equities, an indicator of the sentiment of small investors such as Thakkar, hit a near four-year high last month.

The average daily turnover by retail investors in cash equities rose to 12,475 crore in June, the highest since October 2010, data from Motilal Oswal Financial Services Ltd showed. This is a 5.2% increase over May, and up 89.1% since December last year. The number started picking up from March. In the futures and options segment, volume rose nearly 28% to 93,328.71 crore—the highest since at least April 2011, before which comparable data was not available.

Brokerages focused on retail investors are abuzz with hiring activity.

Sharekhan Ltd has added 150 people in the last two months to meet the rising demand.

And it has also appointed more franchisees (who effectively serve as branches).

“We used to add 25-30 franchises per month in the last financial year. In the last three months (April-June) it has increased to 35-40 per month," said R. Kalyanaraman, senior vice-president of sales at Sharekhan.

Geojit BNP Paribas Financial Services Ltd hired around 100 people in the last month and its managing director says most of the retail investors entering the market are not first time investors and that not all are buying.

“Retail investors have definitely come in. However, many have come to sell rather than buy, I would say. When they saw good returns for the first time in many years, they are offloading," said C.J. George, managing director of Geojit BNP Paribas, adding that such a behaviour was not unusual.

“That said, some are taking fresh positions too. It is a good time for them to enter the market. We have started hiring in customer care, sales side, and call centre," added George.

Not all brokerages are hiring; some would rather wait and see.

“While the indications are positive and we are indeed seeing better retail activity than the last few years, we are approaching this with a cautious optimism for now since it has only been a month since the participation has improved," said Vinay Agrawal, executive director, equity broking at Angel Broking Pvt. Ltd.

Interestingly, the retail investor boom seems to be widespread.

According to data from National Stock Exchange (NSE), the number of retail investors trading from cities outside the top 100 cities increased 30% to 6,06000 clients in the June quarter from the same period in the year before. Daily average retail turnover from such cities increased 92.6% from a year before in the June quarter, NSE said in an email.

“The improvement in sentiment is across the board, and retail investors across the country are getting active. Since it seems to be a structural bull run, I believe retail investors are here to stay," said Deven Choksey, managing director and CEO of KR Choksey Shares and Securities Pvt. Ltd.

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Published: 10 Jul 2014, 12:25 AM IST
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