Why retail investors continue to root for underdogs

India's retail investor landscape is undergoing a dramatic transformation. While a diverse range of stocks has captured the fancy of individuals fishing in the equity markets, the mid- and small-cap segment—perceived as riskier but with higher potential returns—remains a key draw.

- Mayur Bhalerao & Niti Kiran

Despite recent price fluctuations, these stocks have seen a surge in retail interest.

About 56% of mid-cap stocks and 72% of small-cap firms analyzed by Mint witnessed a sequential rise in retail investor count during the September quarter. In contrast, fewer than half of the stocks in the benchmark Nifty 50 index experienced a similar increase, Mint's analysis shows.

Among the 127 mid-cap stocks analyzed by Mint, 7.1% even added more new individual investors in the financial second quarter than they had in the preceding one. Despite nearly a third of these mid-cap stocks experiencing a share price decline during the September quarter, over 42% managed to grow their retail investor count in that period.

Among mid-cap stocks, Yes Bank Ltd, state-run hydropower firm NHPC Ltd, and wind turbine maker Suzlon Energy Ltd attracted over a million new retail investors between the July and September quarters of 2023-24 and 2024-25.