Individual investors are behind the latest market uptick

Individual investors are the likely reason behind the latest market uptick. The benchmark Nifty 50 index has improved 10 per cent since June 15. During this period, foreign portfolio investors (FPIs) have sold shares worth nearly Rs 5,000 crore. FPIs is considered to be the main drivers for the market. The investments in mutual funds also have been muted at less than Rs 2,000 crore for the same period.

The sharp gain in many stocks is believed to be the effect of individual investors. there is a dip in institutional share in turnover also. both small as well as high-net-worth individuals (HNIs) are the reason behind the uptick in the market.

According to Abhiram Eleswarapu, head of India Equities, BNP Paribas “Data seems to suggest retail investors are driving the markets. This can be seen in the sharp increase in the new investor accounts opened, the rising share of non-institutional participation, and activity via internet and mobile-based trading. This is not just in India, but also seems to be the case in countries such as China, Korea, and elsewhere”. He also added that “Institutional investors, on the other hand, seem unanimous in their view that the markets may have overheated somewhat”.

Fear of missing out (FOMO) is another factor that is influencing retail participation. The Nifty has rebounded 42 per cent from the coronavirus lows on March 23.

First-time investors and millennials have become active in the market post lockdown. Most of them are investing without much fundamental basis on the market. According to G Chokkanlingam, founder, Equinomics “A lot of people are sitting at home and have plenty of time to trade. Most of these retail investors do not look at any valuation parameter or other fundamentals they see the price and take a position”