Retail Investors Turn Value Buyers as FIIs Exit

Retail investors raise holdings in over 400 companies in Jan-Mar quarter

Retail investors adopted a contratrian investment approach even while overseas investors were on a selling-spree in the past quarter. Their equity stakes have now increased in most companies that have seen a change in public holding in the January-March quarter.
Attractive valuations prompted them to go for a 'value buying' in many companies, particularly those which have a quality management background, high growth visibility and the potential to offer better returns on a medium-to-long-term basis, according to brokers. However, there are concerns that some retail investors may have fallen pray to speculative activity and left with poor quality shares of fundamentally weak firms after operators exited at higher levels. "Higher retail holding in some of the companies could be attributed to value buying prompted by selling from foreign institutional investors in the past quarter," said Nandip Vaidya, president-retail broking, India Infoline. While many long-term retail investors would have used FII selling to buy shares cheaper, that has, however, hardly led to any significant change in their overall holding in the listed space. There has been lack of fresh investment from new stock market participants, according to Mr Vaidya.
Retail investors have increased their holdings in as many as 405 companies against 287 in which they cut their exposure during the period. There was no change in the remaining 54, which have released their shareholding data so far. HCC, JBF Inds, Titagarh Wagons, Geodesic, Educomp Solutions, Lakshmi Machine Works, Alok Inds and Mercator Lines are a few notable examples in the category. Retail holding has risen by 1.2 to 4.7 percentage points between January and March. In most of these companies, excluding Lakshmi Machine, HCC and JBF Inds, FII holding fell between 0.4% and 4.2% during the period.
Brokers feel that after years of experiencing ups and downs in the stock market, retail investors have become matured and smarter to do value pick when right opportunities emerge. "Many smaller players could not participate in past year's bull run and so jumped on the opportunity to buy good quality shares after prices fall to tempting levels last quarter," said KR Choksey Securities MD Deven Choksey. Last week, the broking firm held two roadshows for retail investors in Gujarat. While more than 300 investors participated, most of them, said Mr Choksey, were positive on the market, showing interest in quality, long-term ideas.
ET spoke to a few seasoned retail investors to know what strategy they adopt in a bearish market. One of them — Sunil Maheshwari — a 52-year-old investor from Amalner, a small town in Maharashtra's Jalgaon district, bought selectively on which he claims to have earned decent returns in the recent stock market recovery.
"We remained confident about the Indian economy and corporate earnings even when the market conditions were unfavourable, globally. We invested selectively in sectors like banking and entertainment on which we could earn decent short-term returns," he said.
vijay.gurav@timesgroup.com 

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