Retail buyers in India look to buy high-risk stocks: Expert View


The revival of Indian equities despite the economic impact from the still spreading coronavirus has confused professional investors. From sharks to Angel investors, they are climbing into beaten-down stocks i.e., the stocks which are highly risky and better returns stocks such as financials, telecom, and high-quality drug makers expecting that Asia’s third-largest economy India may rebound faster than expected as the whole world gradually unlocks from the biggest lockdown. Imitating the rush of the Angel investors (investors being invested for the first time) who push record sign-ups at US brokerages including Robin Hood, Indian Retail investors have opened 18 lakh new accounts since March. But the Index S&P BSE Sensex shows a dip at 14% in the year even after the recovery from the catastrophe sell-off since 2008. The Sensex showed a recovery of 36 % from March 25 as the local policymakers and governments all over the world added stimulus to regenerate the destroyed economy caused by the coronavirus. Still, there is an imbalance in the growth performance, the banking industry shows a downward trend and dipped to 31% on the other hand healthcare stocks have improved.

Nithin Kamath, CEO of Zeroth Broking Ltd, India’s largest online discount broker said that returns from Blue chip shares look reasonable and they are expecting many more new investors coming into the market to take this advantage. Experts said that the bad times are over that most of the retail investors suffered irregular fluctuations caused by the pandemic coronavirus. Vijay Chandok said that their customers have been the net buyers corresponding to about 85 billion rupees within that the buying percentage increased from 51% to 62% in the period. Other brokers including IIFL securities said that demand for mid-cap stocks has been revived.

Compared to the previous month of May, trade has been fairly better and the services and purchasing manager index showed double-digit in May from the world’s record low in April. At the same time, experts from Bloomberg Intelligence expect that the economy will contrast at 4.5% for the financial year 2021.