10 Types Of Investors In The Indian Stock Market!

To be a successful investor in the stock market, you need to have a solid strategy of how you would go about it. Also, take into consideration your risk appetite. Basically, the risk appetite is your risk-taking ability to bear losses if any. Based on that, there are 9 types of investors in Indian Stock Market.

They have their risk appetite in the wide range of low, medium, or high. Once you start investing, you must be well aware of how much of a risk-taker you are. This in turn will define your investment profile and type, hence letting you achieve your financial goals.
 

 

 

Various Types of Investors in Indian Stock Market
 

 

1.   Individual Investors

Individuals like us form a crucial and major part of the securities market in India. It is because we are huge in numbers. Further, the investors in India are divided into 2 more categories namely;

• ·      Retail Investors

These are the ones who are eligible to apply for shares for an amount less than Rs.1 Lakh.

• ·      High Networth Individuals [HNI]

As the name suggests, these individuals are of high net worth value. Hence, they are eligible to apply for shares for an amount exceeding Rs.1 Lakh.

2.   Partnership or Joint Hindu Family

This is an association of people or groups of them who come into partnership or from a joint Hindu family. In the latter case, they are the ones who have a Hindu Undivided Family [HUF] Business and are looking to invest their surplus into the stock market. Thereby, hoping to earn good returns on their investment.
 

 

This is one of the types of investors in Indian stock market. Let’s move on and know the other ones.

3.   Companies – One of the types of investors in Indian Stock Market

The other term for this is corporate investors. Companies are also known to operate as individual investors. But for this to happen the Board should be authorized by “Memorandum of Articles”. This is one of the famous types of investors in Indian stock market.

4.   Societies & Trusts

By the name itself, it is self-explanatory that they are an association or group of people too. But they are powerful. They follow the by-laws to invest securely in the Indian stock market. So, whatever returns their investment earns would be solely be invested for the objectives for which the society or trust was formed in the first place.

5.   Mutual Funds

This is a very popular terms nowadays. Remember hearing in many advertisements that “mutual funds are subjected to market risks?”

Yes, they are! But what is a mutual fund? It is a form of collective investment by the investors. Basically, a fund manager is in charge of collecting money from different investors. Then use all these funds into the stock market very wisely knowing the risk appetite of each individual.
 

 

The income then received is in the form of capital gains, interests, dividends on the securities. People investing in mutual funds form one of the types of investors in Indian stock market.

6.   The Financial Institutions

This types of investors in Indian stock market are both high in volume and value. The securities market is heavily comprised of Financial Institutions in both the primary and secondary markets.

Examples for Financial Institutions are banks, pension funds, insurance companies, and venture capital companies as well.

Now, let us talk about the last types of investors in Indian stock market.

7.   Foreign Institutional Investors [FII’s]

This is an entity that came into existence outside India with the single purpose to invest in India. The entities which comprise the FIIs have to mandatorily register with the Security Exchange Board of India [SEBI].

Now, let us talk about the characteristics of types of investors in Indian stock market.

What type of investor are you in the Indian Stock Market?

Here are the 3 major characteristics of investor types;

1.     The Conservative Investor

The ultimate concern for this type of investor in Indian stock market is the protection of his or her capital. They cannot afford to risk their income, hence their risk appetite is small. Being a low-risk investor, they are prone to get sleepless nights during stock market volatility or crash!

 

 

What does Conservative Investor prefer?

They are comfortable in investing their capital in debt instruments. As their characteristic or nature is non-aggressive, so their expectations are not high either. They are okay with moderate capital growth but with a steady flow of returns on their investments.

2. Balanced Investor

These are those types of investors in Indian stock market who are willing to take risks but not big ones. They do so only to enhance their stock portfolio.

They have the notion that this would make them tolerable to the volatility of the stock market while they do not have to worry about investing in high-risk instruments for getting bigger gains in returns.

 

 

What does Balanced Investor prefer?

These are well-known as medium-risk investors. They love to have a balance between stability and returns or growth. So, you would see their portfolio to be a good mix of debt and equity-oriented instruments. Debt to obtain stability in the portfolio while the latter is to invest in stable companies.

Last but not the least, comes the most agile types of investors in the Indian stock market!

3  3. Agrressive Investor

True to their name, this investor is always up for the risk. They are the ones who can take the stock market’s short-term volatility in their favour which is quite amusing!

They do not fear exposing their portfolio to some high-risk instruments in return for gain and growth. To talk about an essential difference between aggressive and other low & medium-risk investors, it is that the aggressive one is ready to stake it at the greater risk!
 

 

 

What does Aggressive Investor prefer?

As said, they do not mind exposing their stock market portfolio to high-risk instruments. They try securities markets, equity markets and might also invest their funds in unknown companies. Only in pursuit of further enhancing their stock portfolio.

This types of investors in Indian stock market is highly competitive and can opt for leveraged products like the derivatives of equities, other assets, etc.

Final Thoughts

To know your type of investor in Indian stock market, it is advised to first understand your risk appetite. Remember, wealth creation is truly a time-taking process. So, stay invested to bear the fruit of your patience, timely strategies, and financial wisdom.