Small investors just a sixth of the total

Three-fourths of equity investors there since 2003.

Just around 15 per cent of the country's equity investors are speculators, entering and exiting the market several times during a year. Almost 75 per cent of them have been there since 2003""that is, they have ridden out many ups and downs in the past.

And around a sixth of the investment made by individuals directly in the country's stock markets is made by individuals who earn under Rs 20,000 a month""a twentieth is invested by those earning less than Rs 8,000 a month.

These are the findings of the Invest India Income and Savings Survey 2007 produced by IIMS Dataworks. Apart from giving valuable insights into the investment habits of investors, the findings are especially relevant in the context of the plethora of stories that talk of the small investor losing thousands of crore each time the market crashes. 
 

EQUITY PORTFOLIO VALUES OF SMALL INVESTORS                                                                       (Rs Cr)
Annual  incomes of small  investors	Equity  exposure  of mutual  fund investors	Equity  exposure of  direct equity  investors	Equity exposure  of investors with  both mutual  fund and  direct equities	Total  equity exposure
< 1 lakh	1748	3673	764	6185
1-2.5 lakh	6910	3300	4125	14335
2.5 - 5 lakh	17954	7339	16876	42169
> 5 lakh	13849	12653	31032	57534
Total	40461	26965	52797	120223
Source: Invest India incomes and savings survey 2007

IIMS Dataworks' survey asked questions about why investors entered the market and those classified as speculators answered in the affirmative to questions such as "I don't want to miss out on a boom", "I like to speculate", and so on. Collectively, the equity portfolio of the speculator group is around Rs 26,000 crore, according to the survey.

According to the survey, there are at present a little over 7.2 million individuals in India with equity market positions. Over half of them have only mutual fund investments""in either balanced or mainly equity funds. Nearly two million have equity positions only, and the rest have investments in mutual funds as well as directly in the market.

At the time of the survey, around four months ago, the aggregate financial savings and investment portfolio of these 7.2 million investors stood at roughly Rs 400,000 crore while their aggregate equity portfolio value stood at Rs120,000 crore (29.7 per cent of their total portfolios).

In other words, around 2 per cent to 3 per cent of the total market capitalisation is held by small investors. While promoters hold around 50 per cent to 60 per cent of outstanding shares, FIIs hold another 15 per cent to 20 per cent, banks/mutual funds/insurance firms hold the rest.

While the Invest India survey would suggest the majority of individual investors would remain put in the current stock market correction, there is a question mark over the six million new small investors who indicated they would enter the market for the first time over the coming year and the two million existing equity investors who were considering ramping up their investment.