Retail investors go against Brexit tide, buy shares in turmoil
What has come to be known as a 'Black Friday' for the markets worldwide, the day of Brexit referendum results on June 24 saw the stocks plunge sharply everywhere, including in India, where the benchmark Sensex lost nearly 1,100 points intra-day before closing the day with a 605-point crash.
In the process, the total investor wealth took a hit of nearly Rs 1.8 lakh crore in the Indian stock market while the overall loss for world markets is estimated at around $2.5 trillion for the day.
The post-trading data released by the stock exchanges show that the foreign investors sold heavily while brokers also remained net sellers in their proprietary accounts.
However, domestic institutions, including state-run and private sector insurers as also domestic mutual funds, pitched in to shore up the markets from their lows and remained net buyers to the tune of Rs 115 crore.
However, the biggest surprise, as per the stock exchanges' data, was the retail investors who trade as 'clients' of brokers with a net purchase higher than that of the domestic institutional investors (DIIs). These clients bought shares worth Rs 1,723.47 crore while their sales were to the tune of Rs 1,605.72 crore -- making them a net buyer with Rs 117.74 crore.
This is the highest in over three months since March 23, when they made a net purchase of Rs 150 crore. Besides, it has been very rare in the recent past that the retail investors have made a net purchase of over Rs 100 crore in a single day -- only four such occasions so far in the current fiscal.
The retail Indian investors were also joined by NRIs, who also made a net purchase of Rs 1.22 crore during the day.
In comparison, the brokers themselves seem to have played safe with a net sale of Rs 5.54 crore as they squared off most of their positions after buying shares worth Rs 851 crore.
The foreign portfolio investors were undoubtedly heavy sellers. They bought shares worth Rs 3,865.55 crore and sold Rs 4,494.69 crore worth shares -- resulting in a net sale of Rs 629.14 crore.
Indian markets are heavily dominated by foreign investors as they command over 21 per cent of total shares available for trading while that of domestic institutions is just about 8 per cent. While promoters own an estimated over 50 per cent, retail investors -- including small individual shareholders and HNIs -- are estimated to have over 10 per cent. The rest are owned by corporate bodies, trusts and others.
The total number of investors in Indian markets is over three crores, but it is a few thousands of foreign investors whose trading calls mostly move the shares. Therefore, large- scale buying by Indian investors could not save the Indian stock market from the heavy plunge, post-Brexit.