Retail holding in NSE firms touch all-time high: All you need to know

The share of retail investors in the National Stock Exchange (NSE) listed companies has reached an all-time high, hitting 7.62 per cent as of September 30, 2023, from 7.50 per cent on June 30, 2023, according to data from primeinfobase.com.  

Simultaneously, the government's share in the firms has seen a significant uptick, reaching a 5-year high of 8.79 per cent during the same period. This shift in ownership dynamics comes as private promoters saw a decline in shares, marking a 4-year low of 41.55 per cent on September 30, 2023, according to primeinfobase. 

According to Pranav Haldea, Managing Director, PRIME Database Group, over a 14-year period, the share of the government has declined considerably, from 22.48 per cent as of June 30, 2009, primarily due to the government’s divestment programme. Haldea also attributes few new listings and lacklustre performance of public sector firms relative to their private peers, as factors that contributed to the government’s interest in the market. 

On the other hand, stake sales by promoters to take advantage of bullish markets, relatively lower promoter holding in companies getting listed and overall institutionalisation of the market have resulted in private promoters’ share decline, said Pranav Haldea. 

Domestic investors holding to surpass foreign investors    

The combined share of institutional investors declined to 34.39 per cent in the quarter ending September 30, 2023, down from 35.01 per cent in the quarter ending June 30, 2023, the data showed. 

However, the holding of Domestic Institutional Investors (DIIs) has surpassed Rs 50 lakh crore and according to primeinfobase, it is poised to overtake Foreign Institutional Investors (FIIs) in the coming quarters. 

The gap between FII and DII holdings has reached an all-time low, with DII holding now just 13.11 per cent lower than FII holding, marking a significant narrowing from the widest gap observed in the quarter ending March 31, 2015, when DII holding was 49.82 per cent lower than FII holding.

The FII to DII ownership ratio has also decreased to an all-time low of 1.15 as of September 30, 2023, compared to an all-time high of 1.99 in the quarter ending March 31, 2015.

While the overall share of DIIs marginally decreased to 15.99 per cent as of September 30, 2023, from 16.05 per cent on June 30, 2023, the DII share in the Nifty-500 and Nifty-200 universe increased from 16.57 per cent to 16.70 per cent and from 17.12 per cent to 17.51 per cent, respectively, the data showed. 

Net inflows by domestic Mutual Funds (MFs) stood at Rs 53,715 crore during the quarter, whereas Insurance companies sold a net of Rs 23,996 crore, and Banks sold a net of Rs 10,424 crore. Overall, net inflows from DIIs stood at Rs 42,632 crore during the quarter.

FII shares decline despite net inflows 

The FII shares in NSE listed firms declined to 18.40 per cent as of September 30, 2023, down by 56 basis points from 18.96 per cent on June 30, 2023, despite net inflows from FIIs of Rs 44,113 crore during the quarter. 

In the Nifty-500 and Nifty-200, the FII share increased from 19.04 per cent to 19.45 per cent and from 20.44 per cent to 21.05 per cent, respectively, indicating a greater concentration towards larger companies.

Sector-wise, FIIs invested Rs 19,375 crore, Rs 7,882 crore, and Rs 7,549 crore in capital goods, financial services, and IT sectors, respectively. However, they withdrew Rs 11,493 crore, Rs 4,932 crore, and Rs 3,120 crore from the metals and mining, services, and oil and gas sectors, respectively.

12 Companies saw FIIs and DIIs raising shares 

According to primeinfobase data, 12 companies experienced a simultaneous increase in stake from the trinity of promoters, Foreign Institutional Investors (FIIs), and Domestic Institutional Investors (DIIs). The list includes, Wipro, Aegis Logistics, Bombay Burmah Trading Corp., Maharashtra Seamless, Mrs. Bectors Food Specialities, Man Infraconstruction, Greenpanel Industries, Rallis India, Choice International, Thirumalai Chemicals, Foods & Inns, and Snowman Logistics. 

Mutual funds raise stake

Mutual funds strengthened their position in the exchange, with their share rising to 8.73 per cent as of September 30, 2023, compared to 8.63 per cent on June 30, 2023. Sectorally, fund houses opted for increased exposure to the healthcare and consumer discretionary sectors, while reducing their presence in industrials and financial services.

The share of Insurance companies, on the flip side, decreased to 5.48 per cent as of September 30, 2023, down from 5.66 per cent as of June 30, 2023.

Notably, government-owned LIC maintained a substantial share (at least 68 per cent) of equity investments by insurance companies, amounting to Rs 11.72 lakh crore. However, LIC's overall share across 274 companies with a holding exceeding 1 per cent decreased from 3.85 per cent to 3.73 per cent, indicating some portfolio adjustments.  Insurance companies increased their exposure to the Information Technology and Services sectors while reducing investments in FMCG and Telecommunication.

Retail, HNI, and MF combined shareholding reach all-time high

The combined share of retail investors, HNIs, and mutual funds reached an all-time high, standing at 18.40 per cent as of September 30, 2023, up from just 9.44 per cent on June 30, 2023. Notably, the share of High net individuals (HNIs), representing individuals with a shareholding exceeding Rs 2 lakh in a company, rose to 2.05 per cent as of September 30, 2023, up from 1.95 per cent on June 30, 2023.