Retail Outsmart FII emerge as strong counterforce

On June 3, buoyed by positive exit poll predictions, retail investors in India sold stocks worth Rs 8,588 crore to cash in on the market upswing. Meanwhile, foreign investors and mutual funds were actively buying these stocks.

The scenario reversed the next day when actual results triggered a market downturn. Retail investors capitalized on the falling market, becoming net buyers of shares worth Rs 21,000 crore on June 4. On the same day, FIIs and mutual funds were net sellers, offloading stocks worth Rs 19,000 crore.

This pattern persisted on June 5, with retail investors purchasing equities worth Rs 3,000 crore. In contrast, FIIs sold stocks worth Rs 6,500 crore, while mutual funds turned into net buyers, investing Rs 2,700 crore. Market experts attribute this behavior to the growing confidence of Indian retail investors in the stock market, strengthened by their post-pandemic experiences where markets consistently rebounded from declines without significant corrections.

Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, noted that this trend reflects the “buy on dips, sell on rallies” strategy increasingly adopted by retail investors. Ajay Bodke, an independent market analyst, highlighted the surge in demat accounts, which jumped from 40.80 million to 158.05 million since March 2020, as a sign of growing retail participation.

This confidence is further evident in the rising mutual fund assets, with average monthly SIP inflows reaching Rs 20,000 crore, providing a strong counterforce against FPI selling. Many market participants now believe that the Indian stock market stands on three distinct pillars—FIIs, retail investors, and DIIs—making it more resilient amidst global uncertainties and economic slowdowns.