FPI surpass retail in getting investment calls right in Dec 2022 quarter

Hike stakes in 639 companies to gain an average 6.4%, prune holdings in 700 underperformers; retail investors, on the other hand, get many of their calls wrong

Foreign portfolio investors (FPIs) tend to influence the stock markets more than retail investors. Sample this: A total of 639 companies in which they hiked stakes during the three-month period ended December 2022 gained an average 6.4 per cent.

On other hand, the 890 companies in which retail investors hiked their stakes lost an average 2 per cent, according to data compiled by Prime Infobase. Interestingly, companies in which retail investors pruned their holdings (853) gained an average 9.3 per cent.

Nearly 700 stocks in which FPIs cut their exposure underperformed the markets. During the December 2022 quarter, the Nifty had gained nearly six per cent.

“An analysis of shareholding changes and stock price performance shows overseas funds are the most influential class. Unfortunately, retail investors tend to get it wrong,” said an analyst.

Between Covid lows in March 2020 and October 2021, the Indian markets had posted a stellar show, with several stocks more than doubling. Between October 2021 and December 2022, returns have plateaued, making it challenging for retail investors to make profitable bets.