Page 6 - Connect 2022-23
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A Structural Change in Investment in NSE listed companies – Step towards
“Atmanirbharta”
Indian stock market has been observing made it very convenient for retail members
a structural shift in holding pattern for to participate.
companies listed on NSE. Gap between
holding by FIIs and Domestic investors (DII Targeted drives by regulators in promoting
+ Retail + HNIs) in NSE listed companies mutual fund investments (like “Mutual
has been narrowing down consistently. fund sahi hai”), roping in prominent public
Significant change has been observed figures in advertising the products and also
during last 8 years. During these years i.e ensuring highlighting the risks associated
period between March 2015 and March 2023, with the investment has resulted in wider
domestic participation share has increased awareness and improved financial literacy
by over 40%. This duration depicts change in Indian domestic investors. The total share
in holding pattern between FII and DII, from of institutional investors, including FII and
highest ever gap to lowest ever gap. Quarter DII, on NSE also reached an all-time high of
ending March 2023, domestic participation 36.91% in Q4FY23.
achieved an important milestone, first
time ever its share crossed 25% mark in Increased domestic participation is likely
companies listed on NSE, it touched 25.72%. to have a better stabilizing effect on Indian
markets. Lesser dependency on foreign
This is an important step and clearly a funds expected to provide better cushion
structural one as Domestic participation against the external shocks. We observed
has been rising for straight 6 quarters. failing of banks in US and Europe in last
In 2015, the gap between holding by FIIs few months, which had a very negligible
(23.30%) & domestic investors (18.47) was impact on Indian financial institutions.
nearly 500 basis points, today Domestic Wider and stronger domestic participation
investors share is more than that of the FIIs. clearly demonstrates increased domestic
Within institutional investment pattern, gap confidence in India’s growth story.
between FII, DII holding declines to lowest-
ever level in quarter ending Mar 31st. Share Increase in domestic participation likely to
of domestic mutual funds (MFs) has seen an provide stimulus to the government, to fast
increase for consecutive 7th quarter and has track its initiative to reduce its share and
reached an all-time high of 8.74 per cent. ownership in PSUs. Government focusing on
governance, than running a business is a
Another important observation is increased critical step to push India on higher growth
retail participation, which too is at all time high trajectory. Increased domestic participation
of over 7%. This is an indication of increased to own the stake offloaded by government is
awareness about investment opportunities certainly going to avoid additional external
for the retail sector. Technology certainly has dependency and improve “Atmanirbharta”
played an important role in this structural (self-reliance).
shift. Expanded footprint of availability
of high speed internet connectivity and
availability of low cost mobile apps has Dr. Prashant Dhopavkar
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