Small investors offload shares

MUMBAI:Small investors have remained consistent sellers of domestic equities in 2014 as the strong rally witnessed across small and mid cap stocks have finally given them an opportunity to book profits and exit the market.

After remaining net sellers to the tune of Rs 4,540.5 crore in May 2014, they offloaded shares worth Rs 2,187.58 crore and Rs 972.73 crore in June and July respectively taking their total sales this year to Rs 17,185.73 crore.

“It is true that retail investors are back in the market. But that does not necessarily mean they are buying stocks. Investors who were trapped in small and mid cap stocks during the 2007-08 market rally are now cashing out of the markets,” said Dinesh Thakkar, founder and chairman, Angel Broking.

According to him, this has been the trend during the last two decades.“Unlike institutional investors, small investors do not take a long term view of the market while investing. So there is a greater tendency among small investors to book profits whenever, the stock prices are witnessing an up-trend. Even the domestic institutional investors are net sellers in the market which shows that they are facing redemption pressure from small investors,” he said.

He also added that another 5-7 per cent correction in the markets are expected to attract some amount of participation from retail investors as the general enquiry levels from them have gone up in recent weeks.

While old time investors are offloading their portfolio, experts also pointed out that a certain section of small investors are entering the market through the systematic investment plan (SIP) offered by mutual funds.

“The positive momentum that we have seen in the markets during the last six months was purely driven by expectations rather than any change in the ground reality. So genuine small investors have opted for the systematic investment plan route to enter the market while most of the selling that we have seen has come from smart traders. They are churning their portfolio in a big way,” noted Vinod Nair, head of fundamental research at Geojit BNP Paribas Financial Services.