Despite significant volatility in August, retail investors bought shares worth Rs 10,000 crore, surpassing investments made by foreign investors, banks, and insurers. This marked a sharp increase from Rs 2,380 crore in July though the net buying of retail investors was pegged at Rs 11,855 crore in June.
In comparison, the net buying of foreign investors was pegged at around Rs 9,200 crore in August while banks bought shares worth Rs 1,083 crore, and insurance companies invested Rs 3,973 crore in Indian equities.
Analysts are of the view that retail investors continue to invest in the domestic market, adopting the buy-in-dip strategy. This approach is expected to continue till there is a disruption in the domestic economy or global trend, which continues to be steady as of now.
Indian markets saw significant volatility in August, even as the Sensex and Nifty gained 0.8 percent and 1.1 percent, respectively. Broader markets also performed well, with the BSE MidCap up 0.9 percent and the BSE SmallCap index gaining 1.23 percent.
“This reflects growing bullishness among retail investors about domestic stocks, even in an uncertain environment. Their investment in August outpaced that of foreign investors, banks, and insurance companies, highlighting a strong appetite for equities among individual investors,” said Ravi Singh, SVP - Retail Research, Religare Broking.
Meanwhile, foreign investors remained cautious, selling Rs19,000 crore in Indian equities from August 1 to 19, likely due to concerns over global economic uncertainties like inflation and geopolitical tensions. However, from August 20 to 29, they bought shares worth around Rs 28,000 crore, primarily driven by bulk deals in companies such as Ambuja Cement, Tata Tech, GMR Airports, Zomato, PNB Housing, and Nykaa, amounting to approximately Rs 22,000 crore. A section of market participants believe that the buying was sector-specific while indicating no major shift in FIIs' outlook on India.
Meanwhile, mutual funds were the largest buyers, investing over Rs 32,000 crore in the Indian markets. This robust buying reflects strong confidence in India's growth prospects, likely driven by local economic recovery, ongoing reforms, and a stable earnings season, say analysts.
Experts also say that the differential behaviour of different categories of market participants underscores the changing nature and contours of Indian stock markets. While FIIs have been cautious, domestic investors - both retail and institutional - are showing high conviction levels that could be a harbinger of growth in the near term.
Divam Sharma, Founder and Fund Manager at Green Portfolio PMS, noted that continuous buying by retail investors is fuelled by expectations from the third term of the Modi government.
Increasing financial awareness is also playing a role, with retail investors coming to the markets with a better understanding of different asset classes and their return potential. Additionally, listing gains of SME IPOs have served as a key trigger for retail enthusiasm, Sharma added.
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