Understanding Market Participants

Take one ITC trade on NSE on 19 October 2026. The buyer might be saving for a goal, a fund putting new money to work, or a short-term trader. The seller might need cash, be a fund paying out withdrawals, or be rebalancing. The trade itself shows none of this.

A market participant is any person or organisation that invests, trades, issues securities, provides a market service or supervises the market. These roles overlap. A fund can use an algorithm. A broker can also trade its own money. One person can invest in one share and trade another.

Size changes with the participant. At ITC's real close of ₹260.80, 10 shares cost ₹2,608, 100 shares cost ₹26,080 and 5,000 shares cost ₹13,04,000, before charges (derived). The three quantities are illustrations on a real price. Past order books are not published, so we cannot show who placed which order.

What matters is order size compared with liquidity: how many shares can trade near the current price. Yesterday's volume is context, not a promise of today's depth. A large participant can split an order. A small order can still be hard to fill in a thin market.

Appearance, nationality and wealth do not show investment skill. Logos in this lesson identify real organisations so you can recognise them. They are not endorsements.

Ask three questions about any seat: whose money is it, who decides, and what service is provided? Mr. Chartist uses his own money and decides himself. A mutual fund such as SBI Mutual Fund pools investors' money, and its manager decides within the scheme's written rules, called a mandate.

Issuers raise money by offering securities. ITC is an issuer of shares that already trade; Jio Platforms is issuing new shares in its October 2026 IPO. Investors hold assets. Traders change positions. Market makers quote prices and carry the risk. Proprietary firms trade their own money. These activities can overlap.

Then comes the crew. A broker such as Sahi takes your order. NSE and BSE run the marketplaces. NSE Clearing makes sure each trade settles. CDSL and NSDL keep the record of who owns which shares. SEBI sets and enforces the rules. No one in the crew does every job alone.

Insurers such as LIC invest against what they owe policyholders. Pension arrangements such as the NPS invest for members' retirement. What they buy depends on their mandates and the law, not on a rule that they always buy shares or hold them forever.

Owning and trading are different measures. A big shareholder may trade little. A smaller holder may trade often. A shareholding filing shows holdings on one date. A trading report shows transactions over a period. The next chapters use both, and keep them apart.

A retail investor is an individual investing personal money. The exact legal meaning changes by market and product. It does not mean every individual's order is small.

Individuals are the biggest group by head count. On 30 September 2026, ITC had 42,18,619 shareholders. Of these, 41,12,494 were resident individuals holding shares worth up to ₹2 lakh at face value. They are 97.48% of all holders (derived), but together they own 12.70% of ITC. Another 412 larger individuals own 1.49%. Everyone else, 1,05,713 holders (2.51%, derived), owns the other 85.81% (derived). Many seats, small stakes.

Across India, NSE counted 13.5 crore unique registered investors on 31 August 2026, by PAN. By region: North 5.0 crore, West 3.9 crore, South 2.9 crore and East 1.6 crore.

Mr. Chartist can own ITC shares directly, buy units of a fund that owns ITC, or trade under a written plan. Investing focuses on what an asset is and why you own it. Trading usually focuses on a price move over a set period. Either can lose money. Direct ownership gives shareholder rights such as dividends and votes. A fund unit gives a share of the fund, and the fund manager picks the shares.

An individual's limits are real: time, money needed for life, costs, too much in one share, and how a loss feels. Do not assume individuals always buy at the wrong time, or that institutions always know the future.

Before sending money, understand the product, check the provider and protect your login details. In India, check the provider's SEBI registration and exchange or depository membership. Registration confirms status. It does not promise returns.

A foreign investor invests outside its home country under that country's rules. It may be a fund, a pension plan, a company or an eligible individual. Foreign does not mean one nationality, one strategy or one holding period.

In India, the main route for overseas funds buying listed shares is FPI, foreign portfolio investor, under the SEBI (Foreign Portfolio Investors) Regulations, 2019. There are two categories, Category I and Category II. A designated depository participant grants the registration on SEBI's behalf. One FPI, together with its investor group, must hold below 10% of a company's equity. The older label FII still appears in some reports. Foreign direct investment is a different route with different rules.

A real example: on 30 September 2026, 585 Category I FPIs held 9.27% of ITC and 62 Category II FPIs held 1.04%, 10.31% in all. The largest single named one was a Goldman Sachs GQG Partners international fund with 1.96%. ITC's filing states an overall FPI limit of 24% for the company.

An overseas manager may buy or sell because of valuation, country weights, withdrawals by its own investors, currency or mandate limits. A sale does not by itself show a negative view of the company. The same investor may also hold hedges outside the cash market.

Currency adds a second result. The rupee closed at ₹88.78 per US dollar on 6 October 2025 and ₹95.55 on 11 September 2026. ₹1,00,000 was worth US$1,126 at the first rate and US$1,047 at the second, a 7.1% fall in dollars (derived). To stay even in dollars, the holding had to grow to about ₹1,07,626, a 7.6% rupee gain (derived). The exchange rates are real; keeping the rupee value fixed is a teaching assumption. Charges, tax and hedging are ignored.

FPIs use custodians and designated depository participants for registration, safekeeping, settlement and reporting in India.

A mutual fund pools many investors' money under a stated scheme. The manager picks investments or follows an index. Each investor owns units of the fund. NAV, net asset value, is the value of one unit after costs, and it rises or falls with the fund's holdings. A NAV is not a promised return.

Behind each fund are many people. In September 2026, according to AMFI, India's mutual funds managed ₹82.64 lakh crore across 28.62 crore folios. A folio is an investor's account with one fund house. Equity funds had net inflows of ₹38,307 crore, their 67th month of net inflows in a row.

In ITC, 52 mutual funds together held 17.02% on 30 September 2026. The largest were SBI Mutual Fund 3.44%, ICICI Prudential Mutual Fund 3.25%, Parag Parikh Mutual Fund 2.55%, Nippon Life India Mutual Fund 1.57% and UTI Mutual Fund 1.57%. The other 47 held 4.64% (derived). So part of ITC is owned, indirectly, by everyone who holds units in those funds.

A SIP, systematic investment plan, is a schedule for putting money into a fund each month. It is not a separate asset and does not guarantee a profit. In September 2026, SIPs brought in a record ₹32,490 crore from 10.06 crore SIP accounts, about ₹3,230 per account (derived).

New money comes in through purchases and leaves through redemptions. A fund can meet redemptions from cash or by selling holdings under its rules. It does not have to sell the same share of every holding. Buying an open-ended fund from the fund house also works differently from trading ETF units on an exchange.

Insurers invest money they will owe to policyholders later. In ITC, six insurance companies held 20.99%: LIC 16.46%, General Insurance Corporation of India 1.73%, The New India Assurance Company 1.46%, and three others 1.34% (derived). Insurers are regulated by IRDAI. The NPS Trust, which holds investments for National Pension System members under the pension regulator PFRDA, held 1.75% of ITC. Their duties, cash needs and permitted assets shape their choices. They are not automatic buyers in every situation.

DII, domestic institutional investor, is a group used in Indian trading reports. It covers Indian mutual funds, insurers, banks and pension funds; the exact membership depends on the report. It is not every Indian buyer. When Mr. Chartist buys fund units, his own exchange orders are still individual orders; it is the fund's orders that count as DII.

HNI means high-net-worth individual. It has no single wealth threshold that applies everywhere, and it says nothing about knowledge. A wealthy person can trade directly, invest through funds or hire a manager.

Different doors have different minimums. One ITC share cost ₹260.80 at the 19 October 2026 close. One lot of the Jio Platforms IPO costs ₹13,428 (12 shares at the ₹1,119 cap). The retail category in an Indian IPO is for bids of up to ₹2 lakh. Portfolio management services need at least ₹50 lakh.

PMS, portfolio management services, is regulated by SEBI, which sets that ₹50 lakh minimum. In a discretionary PMS, the manager has full freedom to decide. In a non-discretionary PMS, the final buy or sell decision rests with the investor. The shares are held in the client's own name, which is different from owning mutual fund units.

The ₹50 lakh is a minimum to enter, not a target for beginners and not a sign of better results. Fees, strategy, liquidity, concentration, conflicts of interest, who can operate the account and how you exit matter more than a premium label. Ask how results are measured after costs and how assets are kept safe. A registered provider can still lose money in the market.

The issuer is the company whose shares or debt are offered. A founder helped start the business. A controlling shareholder can steer it through ownership or rights. These need not be the same person.

In India, promoter and promoter group are legal categories shown in every shareholding filing. ITC is an unusual case: it has no promoter at all (0%), so all its shares are classed as public. Its largest owner is the BAT group, which holds 22.91% through three companies: Tobacco Manufacturers (India) 17.79%, Myddleton Investment Company 3.88% and Rothmans International Enterprises 1.24% (30 September 2026). Next come LIC with 16.46% and SUUTI, a government-linked holder, with 7.78%.

Jio Platforms is the opposite case. Reliance Industries is its promoter and holds 66.43% before the IPO and 64.48% after it, according to the offer document.

A fresh issue creates new shares and the money goes to the company. Jio Platforms is selling 27 crore new shares, about ₹30,213 crore at the ₹1,119 cap, with no offer for sale, so all of it goes to the company. A secondary trade moves existing shares and pays the seller. When 10 ITC shares sell at ₹260.80, the seller gets ₹2,608 before charges and ITC gets nothing (derived).

New shares can lower existing owners' percentage, as Reliance's stake in Jio falls from 66.43% to 64.48%, while adding money the business may use well or badly. A change in a big holder's stake can come from a sale, a corporate action or a reclassification. Read the filing before guessing the reason.

Pledging means using shares as security for a loan. If the lender enforces it, shares may be sold. A pledge is not a sale by itself. Read the disclosure and the loan terms.

Anyone with unpublished price-sensitive information, not only founders or promoters, faces insider-trading limits. Filings, not guesses, are the evidence.

A market maker stands ready to buy and to sell, quoting a bid and an ask for set quantities. This helps others trade. It is not a promise to take every order at any price.

Formal duties depend on the exchange, product and scheme. In India, market making is compulsory on the SME platforms (such as NSE Emerge), where brokers register to act as market makers. As summarised from SEBI's ICDR rules (Regulation 261), the maker must stay for at least 3 years from listing, quote both sides for 75% of the trading day and hold at least 5% of the issue as inventory. Do not assume a large main-board share such as ITC has a named market maker protecting its liquidity.

Illustration on a real tick: ITC moves in steps of ₹0.05. Suppose a maker quotes a bid of ₹260.75 and an ask of ₹260.80. If it buys 10 shares at ₹260.75 and later sells 10 at ₹260.80, it earns ₹0.50 before charges (derived). This is an illustration on ITC's real price and tick, not a recorded quote.

Inventory means shares the maker holds for a while. If the price moves against that inventory, the maker can lose far more than the spread. In the same illustration, if ITC falls 7 ticks (₹0.35) after the maker buys 10 shares, the loss is ₹3.50, seven times the spread (derived). Adverse selection means trading with someone who knows more, just before the price moves against you.

Quotes can thin out when conditions change. A market maker does not set a company's fair value or guarantee that you can exit. For you as a customer, buying at the ask and selling at the bid is a cost, not income.

A proprietary trader, or prop trader, trades the firm's own money rather than passing on a client's order. A fund manager instead acts for clients under a mandate. One firm can run both businesses, kept separate.

Prop trading is a big part of daily activity. In NSE's cash market from April to August 2026, prop traders made 33.4% of gross turnover and individuals 33.2%. Foreign investors made 13.1%, domestic institutions 13.1%, companies 4.0% and others 3.2%. In August 2026 alone, individuals (33.5%) moved above prop traders for the first time in eight months.

Compare that with ownership. In June 2026, according to NSE's ownership tracker, individuals held only 9.5% of NSE-listed companies directly. Owning and trading are different seats: a small owner can be a large trader.

An algorithm is a set of rules run by software. It can place or manage orders, split a large order, follow an index or run a strategy. It is a method, not a type of investor. High-frequency trading, HFT, is the very fast end of it and uses special infrastructure. Not every algorithm is HFT.

One sign of speed: orders from colocation, servers placed inside the exchange's own data centre, made a record 42.8% of NSE cash turnover from April to August 2026. Mobile apps made 22.6%, and all other channels 34.6% (derived). This is a second way of slicing the same turnover, by channel instead of by participant. The two splits overlap, so do not add them.

Automation can cut manual errors but adds new risks: faulty logic, bad data, broken connections or runaway orders. Testing, monitoring and limits matter. Speed does not prove a strategy is profitable or fair. For individuals in India, SEBI set a framework for safer retail algorithmic trading in a circular dated 4 February 2025.

A broker takes your order and checks your account, money and limits before sending it on. It may offer other services if it is authorised. Accepting your order does not mean it chose the share for you or guarantees a price.

Mr. Chartist's broker is Sahi. Its legal entity is Aaritya Broking Private Limited, SEBI-registered stock broker INZ000317632, NSE member 90375 and BSE member 6867, and a CDSL depository participant (IN-DP-780-2024). An order sent through Sahi still depends on account checks, the market chosen and a match. NSE alone has 1,330 trading members, Sahi among them.

The exchange, such as NSE or BSE, runs the marketplace and applies its rules. It matches buyers and sellers. The clearing corporation, such as NSE Clearing for NSE trades, works out who owes what and stands between the two sides, so each trade settles even if one side fails. Clearing members carry out their part of that process.

Settlement completes the trade: shares move to the buyer and money to the seller. CDSL and NSDL keep the ownership records, through depository participants. One company can hold several licences, but the jobs stay separate.

A regulator oversees activity within its legal powers. In India, SEBI regulates the securities market. Insurance (IRDAI) and pensions (PFRDA) have their own regulators. Having several regulators does not mean every product is approved or guaranteed.

A regulator is not a buyer, a seller or your portfolio manager. A listing on an exchange or a provider's registration does not vouch for business quality or returns. Check the exact entity and its registration number instead of trusting a familiar logo.

Orders, money and ownership are kept in three different places. A trading account handles orders. A funds ledger tracks money owed and due. A demat account holds the shares. One app may show all three, but their legal roles stay separate.

In India, demat holdings sit with NSDL or CDSL and you reach them through a depository participant, or DP. Sahi, for example, is a DP of CDSL. On 30 September 2026, CDSL had 19,34,06,915 demat accounts and NSDL had 4,71,83,877 active accounts through 320 DPs, about 24.06 crore in all (derived). One person can hold several accounts, and the two depositories count slightly differently, so this is not a count of people. Your depository statement confirms your holdings independently of any trading app.

A custodian keeps assets safe for institutions and handles settlement and corporate actions for them. Custody is a service. The custodian is not the investor and does not choose the investments.

If Mr. Chartist buys 10 ITC shares himself, they appear in his own demat account. If he buys units of SBI Mutual Fund instead, his account shows fund units. The ITC shares the fund owns sit in the fund's custody account, in the fund's name, not in his.

Foreign investors use global and local custodians and designated depository participants under India's FPI rules. Not every holder uses the same route.

Match your trade confirmations, holdings statements, ledger and bank entries. A trade being done, the shares being settled and the cash being free happen at different stages. Custody and access controls do not remove fraud, operational or market risk.

A flow report counts trades over a period. A holdings report shows positions on a date. Net buying is total buying minus total selling within the stated data. It is not the change in anyone's portfolio value.

A real day: on 19 October 2026, NSE's provisional report for the cash market on NSE, BSE and MSEI showed DIIs buying ₹14,781.31 crore and selling ₹11,580.12 crore, a net buy of ₹3,201.19 crore. FIIs/FPIs bought ₹11,240.64 crore and sold ₹12,389.28 crore, a net sell of ₹1,148.64 crore. Together the two groups were net buyers of ₹2,052.55 crore (derived).

Scope changes the numbers. For NSE alone that day, DIIs were net buyers of ₹1,936.78 crore and FPIs net sellers of ₹265.20 crore, together ₹1,671.58 crore (derived). Same day, different coverage, different totals.

Every secondary-market trade has a buyer and a seller. So if the two groups together bought ₹2,052.55 crore more than they sold, the other participants in the same trades, such as individuals, prop traders and companies, together sold that much more than they bought. Two published groups are never the whole market.

Longer periods tell a bigger story. In calendar 2025, FPIs were net sellers of ₹1,66,284 crore and DIIs net buyers of ₹7,88,184 crore. In 2026 up to 31 August, FPIs sold a net ₹2,24,442 crore while DIIs bought a net ₹5,63,505 crore, and individuals were net buyers of ₹48,898 crore on NSE. In June 2026, DIIs owned 19.5% of NSE-listed companies, more than FPIs' 15.1%, for the seventh quarter in a row.

Provisional exchange figures and depository-confirmed FPI figures can differ, because coverage, dates and categories differ. Cash-market totals also leave out futures, options and currency positions. A net cash seller may hold another position. The data do not say why each manager traded.

Holdings also change through corporate actions, new issues and reclassification. Do not rebuild anyone's portfolio from one day's total. Past flows give context. They do not predict tomorrow's price.

Take a real headline-style claim: "FPIs sold ₹1,148.64 crore on 19 October 2026." Run it through four checks.

Source: what is it? Here, a provisional exchange report, not a company filing or a confirmed depository figure. An order-book snapshot or a social-media post would each show something different again. Public data rarely tells you who placed an anonymous order.

Scope: what does it cover? Cash market only, on NSE, BSE and MSEI, for one day. Futures and options are not included. Do not compare it with a yearly holding or with derivatives positions.

Purpose: why did they sell? It is not disclosed, so the honest answer is unknown. It could be withdrawals, an index change, a hedge or a risk limit. Their reason may be nothing like your goal.

Your risk: what does it mean for you? A big sale does not explain every price fall, and a big purchase does not make a share right for you. How much you put in, and when you would exit, stay your own decisions.

Mr. Chartist leaves with a seating plan of who does what, not a list of groups to copy or blame. Prices come from matching orders and changing willingness to trade. No group wins every time, and shares can lose value.