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:
The RBI gives 210,000 cr. to the government as dividend. This is massive, and this is after increasing the RBI buffers to the maximum permissible (I think they are wayyy too high even before this)
The budget had only 102,000 cr. in it, so it's pretty big, this number.
We wrote about this @capitalmind_in in 2018 and the exact nuances of how insanely much that number was, that RBI has in "excess". At that time, we estimated that they had over 300,000 cr. in excess, and today that number is way higher. (Links later)
I really really really hope they reduce taxes. They have way too much money already and are desperately trying to buy back bonds early, but not really succeeding. A little relief in personal taxation or GST would be good.
Lousy results by HDFC Bank. Ignore the 38% growth (they conveniently forgot that they merged with HDFC in July last year) - the real profit growth is just 3%. Even that is probably because of Credila (they got a pretax profit of some 7000 cr. because of it) Discl: Small pos.
Credila was sold off in 2024 March, which pretty much made their bottomline. They also had an extra floating provision of 10,900 cr. (which would have brought down the profit) and that's likely because they see more issues in retail.
Oh, no tax this quarter - they got a favourable order of 6000 cr. and wrote back provisions of 3000 cr.
These two: another 9000 cr. that works in their favour. And yet, a profit growth of just 3%. It's a little strange why 10,000+ cr. of floating provisions were taken then.
If you wonder why RBI's all antsy about growth of the credit ecosystem, it's because things are looking really hot here:
The credit/deposit ratio is at the highest it's ever been. Banks have to put about 18% of Deposits in GSecs and 4.5% in CRR.
This means of every 100 rs. Deposit they can only lend out Rs. 77.5. Banks will have their own capital - between Rs. 10 and Rs. 15 for every Rs. 100 in lending so they can lend out as much as 88 also. It appears that banks are lending as much as they can and some more.
This is a little bit of a problem because the areas you see where the C/D ratio is above SLR/CRR limits? Those periods correspond to high inflation; and it appears we are back.
I should write a more detailed piece on this, but I'll start this way: it should not surprise us that banks aren't doing that well. And given that Indian government bonds will have more demand from foreigners, expect this ratio to stay high at least this year.
Oh, and deposit growth is only around 13%, versus credit growth of 19%.
Deposit rates - for relatively shorter terms like a month or two - are better with money market/liquid funds. Corporates have slowly figured this out, at least the large ones. Individuals will.
But, to be fair, banks raise money using bonds and CDs, and thus the C/D ratio should include such liabilities separately. RBI will hopefully give us those aggregate pieces of data too.
Currently HDFC's large bond issuances - probably 2-3 lakh crore - skews it a bit.
Inflation goes up mildly to 5.55% as food inflation shows its ugly head again. Last year though, there was a dip at this time, so that's a bit of a base effect also.
As you can see, closer, here:
Everything else moderated, inflation wise. Only food went up. and that's a problem, since elections are on their way. No wonder the govt wants to cut fuel prices, to compensate.
RBI increases risk weights for banks and NBFCs. This is pretty big!
1) All consumer credit (other than housing, vehicle, gold, edu and MFI loans) see an increase in risk weight to 125% from 100%
What this means is:
In effect, if a bank has 20% CAR for personal loans (unsecured) or loan against fd/stocks, then it's lent Rs. 100 for Rs. 20 in capital. Now that Rs. 100 will be counted as Rs. 125 (125% risk weight) so the CAR falls to 16%.
Banks and NBFCs will now see much lower CARs.
2) NBFC loans will also see an increase of risk weight to 125%. This affects most consumer lending NBFCs and nearly all fintech players.
3) Credit card receivables for banks RW up to 150% (from 125%) and for the two nbfcs that can issue credit cards it's up to 125% from 100%
India's Current Account Deficit fell by half, to $9bn from $18bn in Q1 last year. More charts follow.
Net of gold, India's current account is actually positive! Gold is more a financial account item, since it's more used as a financial instrument. Think of it as reverse FPI or such. If we did that, our current account would be marginally positive:
Service exports were down , merchandise imports were up. The trade deficit expanded to about $21.4 bn for the quarter.