The retail investor remains on the sidelines despite a 16% run up in the markets over the last five months or so. Or so the cash delivery volumes indicate. Average delivery volumes so far this calendar have been the lowest in the last three.
With just four sessions to go, the average delivery volume as a percentage of the overall cash market volume stands at 40.48%. That’s lower than the 41.54% seen in 2011 and 40.58% in 2010. “Though the markets have appreciated from 5000 levels to 5900 levels over the last 5-6 months, on the back of FII flows and government action on the reforms front, retail has not participated much,” said Dinesh Thakkar, CMD, Angel Broking.
Retail investors currently account for nearly half of the overall cash volumes, with proprietary traders, and institutions – both foreign and domestic – accounting for the rest. Delivery volumes had surged to a nearly four-year high of 43.7% in September. Since then, however, they have remained ranged between 41.3% and 41.7%.
But even that is an improvement over earlier months. In February, for instance, deliveries had fallen to around 38.3%. “There has been a marked improvement in delivery volumes this quarter, if one compares it with volumes some 3-4 quarters back, as a few HNIs and smart investors have started investing,” said Thakkar.
C Jayaram, joint MD at Kotak Mahindra Bank, said the markets have to rule steady at some level for a certain period before the retail investor is convinced there is value in putting money into equities. That point may be at hand, say experts, with the markets having formed a base now.
“The markets seem to consolidating and are likely to resume their positive bias in the coming year as corporate earnings revive on the back of downward trend in inflation and interest rate cuts by the central bank. The delivery volumes are likely to improve once we see markets nearing all-time highs somewhere in the first quarter of fiscal 2014,” said Thakkar.