Retail investor sentiment to shape Indian stock market in coming weeks: Kotak Securities

One of the most notable trends in the Indian stock market has been the strong influx of retail investors, particularly after the Covid-19 pandemic. Their growing presence has served as a buffer against foreign capital outflows. As their influence expands, domestic brokerage firm Kotak Securities believes that their investment behaviour will play a crucial role in shaping domestic market trends in the coming weeks and months.

A research report from Kotak Institutional Equities (Kotak Securities) highlighted that retail investors’ returns have been far lower than those of SMID (small and mid-cap) indices. As retail investors have been aggressively investing in these segments directly and indirectly through mutual funds, it will be interesting to see how they react in the coming months to the performance of their investments.

“The investment behaviour of retail investors over the next few weeks/months would be interesting to see. Their price-agnostic investment behaviour (until recently) and continued purchases of stocks directly and indirectly through DIIs (domestic institutional investors) had led to overvaluation in the market for the past 9-12 months and prevented a larger and swifter correction in the market,” said Kotak Securities.

More to come…