PUNE (CoinChapter.com) — Enabled by technology and access to some of the world’s cheapest data, retail investors now account for over 45% of India’s total equity trading market share. The total number of investors stood over 50 million in Nov 2021, rising a stark 61% from Nov 2019.
Similar has been the story of the major indices. While Nifty 50, the index of India’s largest companies, is up 42% in the last 24 months, Sensex rose 44% in the same time frame.
India’s rising number of stock market investors. Source: NSE, FT
“Retail investors have now become a force to reckon with since the pandemic started,” said Rajesh Sehgal, managing partner at Equanimity Investments, noting that the so-called retail boom helped fuel India’s stock market bull-run, with the Nifty 50 index’s largest companies’ valuation shooting upward by over 25% year-to-date, and Sensex by 23% in the same period.
“There have been at least two or three down moves in the market in that time, but when foreigners or big institutional investors have started selling, retail has been buying.”
Sehgal added.
Increasing Adoption of Cryptocurrencies among Retail
Remarkable amidst this increase of retail equity investors is the sharp rise in the adoption of digital assets like Bitcoin and Ether.
In India, crypto investments grew from about $923 million in April 2020 to nearly $6.6 billion in May 2021. That marks nearly a 612% rise in the number of cryptocurrency users in our country. In addition, the largest Indian crypto platform, CoinSwitch Kuber, also confirmed that it had boarded almost 6 million active users since its inception in June 2020.
The average number of daily active crypto users in India. Source: Statista
Role of Mobile devices and Trading Apps
As per the Bombay Stock Exchange data in Nov 2021, more than 19% of total trades were made on mobile devices compared to a meager 3% five years ago. Increasing accessibility to mobile devices has opened doors for people from remote areas to participate in the trade.
IN OCTOBER, the NSE said that more than half of new traders came from outside India’s top 50 most populated cities.
Zerodha, India’s largest broker in terms of retail user-base, reported adding 6m+ new users in the last 20 months.
Within this six million, more than four million were new customers aged under 30. This is a notable change in the investment demographics, as equity investments were traditionally perceived as a closed club for participants usually over 35 years of age.
The Investment market is booming while the real economy is not
Pandemic has resulted in increased domestic savings for the salaried sector. However, the declining saving avenues amidst the low-interest rate regime make equities a preference. Moreover, with the key repo rate at 4%, the FD rates vary from 2.9% to 5.40 for different tenures, retail investors risk negative real returns in the fiat assets.
India interest rate. Source: Tradingeconomics.com
Another reason behind the anomaly is the significant increase in global liquidity. As a result, India reported a total of $36.18 billion FII inflows in FY21, in contrast to $23 billion in the previous fiscal.
Demographic change or a temporary phenomenon
Despite the dreamy numbers today, it is yet to be affirmed if this increasing retail participation is transitory or the beginning of long-term behavioral change. Also, there happens to be an inherent risk from the fact that the investment market has flourished while the real economy has not.
As a result, a major correction could soon find itself unsubstantiated by fundamentals and give way to a wealth-washout not only limited to equities but also to new-age asset classes like cryptocurrencies.
"I write about global Geo-politics, cryptocurrencies and love. A restaurateur by profession, economist by pedigree and a story-teller at heart". Have worked with the Maersk group, ICICI bank and the Ministry of HRD, India before moving out of the corporate. Working to improve primary rural education in India.
Enabled by technology and access to some of the world's cheapest data, retail investors now account for over 45%...
Our Partners
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
Cookie
Duration
Description
cookielawinfo-checbox-analytics
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional
11 months
The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy
11 months
The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.