As the stock markets bounce back, investors are once again busy calling up their brokers. Yet, the memories of the worst financial crisis of the era are yet to fade out of their minds.
Even as equity volumes have increased by more than 50 per cent in the last three months, primarily due to the surge in stock prices, the investors are still shy in betting big on the bourses.
The apprehensiveness was visible from the bleak response from investors in the recent initial public offerings (IPO), said a city-based broker.
The once-bitten-twice-shy investors, are preferring profit booking rather than holding stocks for longer duration, as they are not confident enough to invest aggressively in the markets. As a result, the average ticket size has also reduced.
“Volumes have substantially increased in the last two-three months, but investor's participation is not up to expectation. Investors, particularly retail investors, are cautious in investing. The investors are booking profits, as their average holding period is also less than what it used to be prior to the financial turmoil. The response to the IPOs have not been very good from the eastern markets,” said Rakesh Somani, chairman, Association of National Exchanges Members of India-ERIC.
According to rough estimates, brokers from Kolkata contribute about five per cent of turnover of Bombay Stock Exchange (BSE) and about 12 per cent to the National Stock Exchange(NSE).
“After the financial crisis hit the markets worldwide, the volumes had drastically reduced. The investor's sentiment is yet to fully recover from the shock. Now, the market is picking up, and there are signs of improvement. However, when we compare today's market conditions with that when the Nifty had touched the 5,000 mark, the number of investors is much lesser,” said Vivek Bajaj, director, Kredent Group.
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However, in spite of the setbacks, the signs of recovery are expected to boost investor sentiment.
Sourabh Chatterjee, regional head, Angel Broking, said, “After the financial crisis, the investors outlook has changed. They have become more cautious in investing, but are willing to participate in the market rally. In terms of new clients also, we have been able to increase our base in the region by almost 15 per cent per month.”
In addition, brokers are eagerly awaiting Q3 corporate results, as key parameters point towards healthy results. According to a recent report by Angel Broking, the market sentiment has been upbeat on the back of strong advance tax payments by some top Indian firms.
The surge in the market has been led by gains in banking, metals and realty stocks.