Shifting paradigms: Retail shuffle meets FPI market drive, shows data

Retail investors churn, while FPI adjustments drive notable market shifts

Juxtaposing the change in the shareholding pattern of various stakeholders with stock price movement during a quarter reveals interesting trends.

The data shows that retail investors — those holding shares worth less than Rs 2 lakh in a single company — tend to churn their holdings the most, while changes by foreign portfolio investors (FPIs) have the highest impact on stock price performance.

According to data furnished by primeinfobase.com, retail investors increased stakes in 1,007 National Stock Exchange-listed companies during the three months ended December 31, 2023.

The average change in the stock price of these 1,007 companies was 14 per cent during the quarter.

Meanwhile, FPIs increased their holdings in 718 companies, and their stock prices rose by 20 per cent. The 689 companies where overseas investors reduced their stakes underperformed, with only a 12 per cent rise. On the other hand, companies where small shareholders reduced stakes outperformed, gaining 20 per cent.

During the 2023-24 October-December quarter, the Nifty50, Nifty Midcap 100, and the Nifty Smallcap 100 indices rose by 10.6 per cent, 13.9 per cent, and 18.8 per cent, respectively.

Apart from FPIs, companies where promoters and high networth individuals increased stakes also outperformed, whereas those where Life Insurance Corporation of India increased its stakes underperformed, reveals an analysis from primeinfobase.com.