Individual investors turn net buyers in Jan after 2 months of sustained selling

The sustained bull run on Dalal Street attracted the individual investors, sending their participation in the NSE cash market to a record high of 1.44 crore in January.

After two months of sustained selling, individual investors reversed the course, turning net buyers by investing Rs 36,383 crore in Indian equities in January, according to the NSE Pulse report.

In November and December, they had pulled out around Rs 14,048 crore and Rs 5,923 crore from the markets. So far in fiscal 2024, the individual investors picked up equities of Rs 30,995 crore as against Rs 49,206 crore in FY23.

The sustained bull run on Dalal Street attracted the individual investors, sending their participation in the NSE cash market to a record high of 1.44 crore in January, a 14.6 percent rise over the previous month. In the NSE equity derivatives segment, their involvement also rose to 47.3 lakh, up 11 percent month-on-month.

Despite volatility in the market in January surrounding events like the Union Budget and monetary policy decisions, analysts maintained a positive long-term outlook.

It was perhaps the fear of missing out (FOMO) that fuelled the surge in investor participation, aided by strong economic fundamentals and better financial literacy in the post-Covid days, according to analysts. Increased capital market investments, particularly from tier ll and lll cities, are driving the growth in individual investor participation.

Overall, they expect this rising trend in individual investor participation to persist, given the markets consistently reaching lifetime highs after each dip, offering the investors decent returns and opportunities.

Proprietary traders, on the other hand, continued with their selling streak, offloading Rs 14,406 crore in January, after Rs 15,656 crore and Rs 7,180 crore in December and November, respectively. In fiscal 2024 so far, they took out Rs 85,767 crore, which was more than Rs 43,226 crore recorded in FY23.

Corporates were net sellers with Rs 5,680 crore divested in January, as against Rs 4,254 crore investment recorded a month back. So far in FY24, they sold equities worth around Rs 31,837 crore, compared to their net buying of Rs 12,740 crore in FY23.

After a robust rally in 2023, global equities, both in developed and emerging markets, took a pause in January after the US Fed dampened hopes of lowering the policy rates. Equities in developed markets, particularly in MSCI World Index, edged up 1.1 percent on-month, while MSCI EM Index dropped 4.7 percent, mainly due to a sell-off in Chinese stocks.

Markets in China suffered the worst loss in market capitalisation in January, while developed markets ended the month on a positive note. Indian equities remained steady, outperforming their counterparts in emerging markets, supported by strong corporate earnings and GDP growth outlook.

Brokerage InCread maintains an 'overweight' rating on the Nifty 50 index with an unchanged target of 22,509 and a bull-case target of 23,571. Concerns arise from high stock price movement in low-liquidity smallcaps and midcaps. Key downside risks include political uncertainty in India and globally, given the significance of election outcomes in nearly 50 percent of democratic countries in CY24.

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