Volatility burns fingers, 5 mn direct investors hit exit button

The fall in India's equity market over the past year has triggered glaringly contrasting approaches of active retail investors accessing the market directly versus those using the mutual fund route to buy stocks.

- Ram Sahgal & Srushti Vaidya

The active direct retail route-investors who trade at least once a month-was singed as 5 million investors exited the markets between September 2024 and August this year, per NSE data.

During this period, the unique investor count through the mutual fund route grew 12.5%, per data from Association of Mutual Funds in India (Amfi), suggesting a move towards relatively patient investing amid the volatility.

However, market veterans said the falling direct retail trend would reverse once the market regains its mojo.

The number of active individual investors on the National Stock Exchange fell from a record 15.7 million in September 2024 to 10.7 million investors at the end of August this year. NSE accounts for 92.6% share of the equity cash segment.

The nearly 32% decline in the number of active individual investors coincided with the Nifty's 17% plunge from its record high of 26,277.35 points on 27 September 2024 to a multi-month low of 21,743.65 on 7 April this year, before recovering to 24,427 points by 29 August, still 7% lower than its lifetime high.