Retail Investors Turn Sellers Amid IPO Surge in September

In September, retail investors in the Indian stock market shifted from buying to selling. This was the biggest sell-off since March 2024, with investors selling over Rs 7,500 crore in shares.

Reasons for the Change

Experts suggest a few reasons for this change. Many retail investors are taking profits from their current stocks to invest in new initial public offerings (IPOs). Additionally, the high market prices have made some investors cautious, leading them to wait for prices to drop.

Market Outlook

Even with retail investors selling, analysts are still positive about the long-term outlook for the Indian stock market. They expect it to keep rising, but they warn that the current investment risks might not be as favorable as before.

September Investment Surge: FPIs Buy More

Retail investors sold their shares in September, but both foreign and domestic institutional investors kept buying. Foreign investors invested ₹55,855 crore, while domestic investors added ₹17,421 crore to their portfolios.

September was a record month for foreign investment, with foreign portfolio investors (FPIs) purchasing nearly $7 billion in shares—the highest since December 2023. NSDL data shows that net buying by FPIs in September was about $6.85 billion, a huge jump from last month’s $873 million. This is also the highest monthly investment since December, when FPIs bought $7.9 billion in shares.

This year, FPIs have been net buyers of Indian stocks, totaling over $12 billion. They have also made significant investments in Indian debt, with total investments in September reaching $3.75 billion, bringing the total for 2024 to $17.09 billion. Overall, total investments in all categories—debt, equity, alternative investment funds, mutual funds, and hybrid funds—have reached about $30.66 billion this year, which is more than last year’s total of $28.70 billion.

In contrast, Brazil saw slight outflows of $0.02 billion, while South Korea had larger outflows of $5.09 billion. Taiwan experienced outflows of $2.15 billion, and Vietnam had outflows of $0.08 billion. Meanwhile, India attracted $5.72 billion in inflows, with Indonesia receiving $1.81 billion, Malaysia $0.20 billion, the Philippines $0.34 billion, and Thailand $0.95 billion.

Key Points

Retail investors sold shares in September after a long period of buying.

Institutional investors are still confident about the Indian market.

Analysts believe the market will keep growing but caution about current investment risks.

The rise in IPOs and high market prices are causing this sell-off.