Retail investors forfeit Rs 1.33 trillion since Budget; m-cap falls 10%

Combined market cap of listed firms down Rs 14.8 trillion

The post-Budget sell-off on Dalal Street has proved to be expensive for domestic retail investors.

The fall in stock prices has shaved off Rs 1.33 trillion from domestic investors’ wealth since the Budget was presented in Parliament on July 5. This does not include losses suffered indirectly through investment in mutual funds (MFs) and insurance companies.

Domestic institutional investors have taken a haircut of Rs 3.33 trillion in their equity holding in the past one month.

The direct equity holding of domestic investors, including high-net worth individuals (HNIs), is now about Rs 10.9 trillion, against Rs 12.31 trillion at the end of trading on July 4.

The Budget was presented during market hours on July 5. The sell-off on Dalal Street began soon after.

The combined market capitalisation (m-cap) of listed companies went down 10 per cent in this period, eroding nearly Rs 14.8 trillion of investors’ wealth.

At the end of June, domestic retail investors had a 8.32 per cent stake in the top listed companies on average. They are the third-largest, non-promoter group of shareholders after foreign institutional investors or FIIs (23.24 per cent) and domestic institutions (13.19 per cent).

In rupee terms, the biggest haircut has been suffered by promoters, including the government. Promoters’ wealth is down Rs 7.34 trillion, or about $106 billion, in the past one month.

In comparison, foreign investors are down by about Rs 3.14 trillion, or $46 billion, during the period.

Domestic investors have also lost indirectly through their investment in MFs and insurance companies that invest in equity markets. 

Their equity holding is now worth Rs 28.5 trillion, down from Rs 31.8 trillion on the eve of the Budget day.

This is nearly Rs 4.66 trillion worth of indirect losses to domestic investors in the past one month.

Domestic investors have done worse than other investors in the current sell-off. Their portfolio value is down 10.8 per cent, compared to 9.1 per cent loss suffered by FIIs and 10 per cent decline in the broader market during the period.

Analysts attribute this to domestic investors’ greater exposure to mid- and small-cap stocks.

“Retail investors, including HNIs, largely invest in mid- and small-cap stocks that have seen a bigger sell-off in the past one month, compared to large-cap stocks. In contrast, foreign investor play in large-cap stocks, where losses have been restricted,” said G Chokkaligam, founder and managing director, Equinomics Research & Advisory Services.

The analysis is based on the m-cap and shareholding pattern of a constant sample of 1,024 companies that are either part of BSE 500, BSE MidCap or BSE SmallCap index. 

The latest market capitalisation is from Monday, while shareholding pattern is as of June 30.