YOU'VE BEEN WARNED

INDIAN RETAIL INVESTORS HAVE NEVER BEEN SO BULLISH ON STOCKS. THEY COME TO THE MARKET IN HORDES, AND TRY EVERY TRICK AND AVENUE—FROM PENNY STOCKS TO ALGOS—TO MAKE A QUICK BUCK. BUT EVEN WITH THE EUPHORIA, IT IS A GOOD TIME TO EXERCISE CAUTION

- ASHISH RUKHAIYAR

₹86,000 crore

Net investment in 2021 (till September) by retail investors in NSE cash segment

₹51,200 crore

Net investment in 2020 by retail investors in NSE cash segment

“IF YOU DON’T FIND a way to make money while you sleep, you will work until you die.”

What Warren Buffett meant was that one should have a steady income stream in place, irrespective of whether one is working, vacationing or sick. Or perhaps, even when one is literally sleeping! But as is the case with most adages, people have interpreted the legendary investor’s words in a way that suits their actions or convenience.

Record numbers of retail, or individual, investors in India are entering the stock markets and capitalising on the year-and-a-half-long bull run—some even while sleeping. What else would explain the investor behaviour in the market currently, especially in the cash (or spot) market?

According to data from the National Stock Exchange (NSE)— the country’s largest by market share in the cash and derivatives market—net investment by the retail segment was ₹51,200 crore in 2020 in the cash market. That has already risen to ₹86,000 crore this year till September.

This is much higher than the institutional participation in the same period. As per NSE, foreign portfolio investors (FPIs)—traditionally considered the prime drivers of a bull run in the Indian stock market—have been net sellers so far, at ₹30,600 crore, in the cash market. And while domestic institutional investors (DIIs) are net buyers, the amount is a mere ₹9,700 crore, as per the exchange.