A thread 🧵on how much retail investors (individuals) dominate daily investing in the markets in India, from the NSE Pulse: static.nseindia.com//s3fs-public/i…
They're 41% of the stock market transactions - down from 45% in 2020-21. Still, massive.
Individuals are 29% of index futures - a big drop from 39% in FY 21 and give way to brokers (PRO).
They give way to FIIs and PRO in the stock futures segment, down to just 19% in FY22 (which is April 2021 to March 2022)
Clearly, those straddle and strangle videos are working - individuals are more than 1/3rd the index option market. FIIs said goodbye, and brokers also love this market. This is a source of worry - it's also the most leveraged segment (indexes have low IVs, so leverage is high)
Individuals love them stock options too, and together with brokers prop accounts, are over 80% of the market.
But none of this means they hold stocks.
🕴️♂️Promoters own 51% of stocks.
🤵 FIIs own 21%!
💼Mutual funds/Insurers 15%
🥷Retail investors 9.3%
(Rest is others)
FIIs own more than Mutual funds+Retail investors added up. Very different from the trading data where Retail investors is more than double of FIIs+Mutual Funds.
But might be changing. Here's mutual fund SIPs every month:
Gold bonds wise - the worry isn't that the government didnt hedge the gold, the worry really is that they didn't do enough of it to change any imports at all. In fact they raised the duty on gold, making gold even more expensive!
The idea of the SGB was that if you only cared about it as a financial asset, then you could just buy an SGB. The lower interest of 2.5% (versus typical bond issues of 8%+) would help the government raise funds at lower interest and hopefully, reduce imports.
Gold imports in USD terms is about $50bn a year. It was $34bn in FY 2015. So about 50% up in 10 years, which isn't big at all in terms of value, less than 5% a year in dollar terms but meaningful in rupee terms with both duty and USDINR going up.
Bad news on the inflation front. 6.21%! Food inflation and personal services has gone bonkers. This is quite deep and we should probably not expect a rate cut unless this moderates quickly.
The difference between last year's numbers and this years is growing - that's what has caused the rise. Very steep.
Even Core CPI (without fuel and food) seems to be rising, through it's still less than 4%. Trend matters more than the numbers.
RBI has increased its balance sheet size enormously, to 72 lakh crores. Let's look at it in a 🧵, because this has an impact on inflation going forward.
Balance sheet growth is now at an extreme! 13% and increasing, and we haven't seen this level since covid!
Remember RBI kept saying they were in a state of "withdrawal of accomodation". This is not a withdrawal. This is accomodation up the wazoo.
The problem is this: When there is growth, if the RBI increases its balance sheet, we see inflation with a lag.