Shareholding moves in Q4: Retail investors chased beaten down stocks

The March quarter proved a nerve-wracking ride for investors, marked by steep market swings. Following a significant 7% correction in the preceding quarter, the market delivered a muted near-1% fall in Q4, making investment decisions particularly challenging.

While caution seemed prudent, as investors largely held their ground, some individual investors–holding nominal share capital up to ₹ 2 lakh–sequentially raised stakes in 45% of the 3,317 BSE-listed stocks during the January to March period.

The median prices of these stocks fell around 25.4% during the quarter, data sourced from Capitaline database showed. This is far lower compared with a median drop of 14% in stock prices where mutual funds (MFs) raised their stakes and 21% fall in prices of companies where foreign portfolio investors (FPIs) bought stakes during the March quarter. 

In the face of significant global uncertainties and consistently volatile markets that have prompted caution among many institutional players, individual investors have displayed a notable appetite for risk with their bold investment choices. 

The ultimate outcome of these decisions remains to be seen. Nevertheless, their observed resilience and continued investment activity during periods of market turbulence imply a strategic adoption of a longer-term investment horizon, suggesting a focus on future growth rather than short-term pain.  

Also read: Q4 earnings watch: An unwelcome trend of profit reversals for India Inc

Risky gamble?

Meanwhile, stocks where individual investors increased their stakes in the fourth quarter and saw a massive drop in their prices include crisis-hit Gensol Engineering. Retail holdings in the company surged a substantial 7.2 percentage points sequentially, only to see the stock price plummet by a staggering 76% during the same period. This suggests that a segment of individual investors may have been attempting to "buy the dip" or saw potential value where the broader market remained sceptical. 

Also Read | Mint Primer: What IT companies’ Q4 show means for investors 

Next was Noida Toll Bridge Company, an infrastructure developer and operator. Individual investors increased their stake by approximately 3 percentage points, while the company's stock price nosedived by nearly 81%.

Furthermore, the list of prominent "buys" by individual investors that coincided with severe price erosion (over 75% drops in Q4) includes VL E-Governance, an IT software company, and media firms like TV Vision and SAB Events. These instances raise questions about the investment strategies employed by these individual investors– were they driven by fundamentals or simply the allure of deeply discounted prices?

This is the second part of a series of data stories on the latest shareholding pattern. Read the full series here.