Retail vs institutions: Who best read consumption tea leaves?

India's economic engine, consumer spending, has stumbled, placing immense pressure on the Union Budget 2025-26 to reignite growth.

- Mayur Bhalerao

The budget delivered a headline-grabbing tax relief for the middle class, fueling hopes of a consumption revival. But who was betting on this rebound? Was it the savvy institutional investor or the everyday retail participant? A closer look at December quarter shareholding data offers clues.

A Mint analysis of 2,513 listed companies reveals a fascinating convergence of sentiment. Retail investors with holdings up to ₹2 lakh significantly boosted their stakes in both consumption and non-consumption firms during Q3FY25, increasing their holdings by just over 50% sequentially. This suggests a broad-based optimism among individual investors.

However, the institutions were playing a more strategic game. Even as foreign portfolio investors (FPIs) turned net sellers overall during the quarter, they showed a clear preference for consumption-driven companies, increasing their stakes in 44.2% of these stocks compared to just 42% of other companies.

Mutual funds mirrored this trend, raising their stakes in about a quarter of consumer-focused firms, compared to a smaller 19% of non-consumption companies. This suggests that while retail investors were broadly optimistic, institutional investors were making targeted bets on a consumption-led recovery ahead of the budget announcement.