Aided by tech, small-town India pours into stocks in new order

They are disrupting the way Indians traditionally invest! In a country of more than 1.3 billion people, where real estate and gold are still the most preferred assets, a new breed of small-town traders is now pouring into the bourses.

Sample this trend from Assam that India Today's Data Intelligence Unit analysed:

• Barpeta, a predominantly agricultural district of Assam with a population base of nearly 1.7 million, had 50,000 of its residents joining the ranks of stock investors in the last four months alone;
• and Dhubri district, home to some two million people, accounted for 1.3 per cent of total registrations in the market in March

Besides, Telangana's Ranga Reddy, and Maharashtra's Nagpur, Ahmednagar, Nashik, and Aurangabad are some of the other districts/cities that have seen a huge interest in stock trading and investing.  

THE NEW-GEN INVESTOR

Participation of individual investors is also on the rise, data reveal. From a share of 33 per cent in the total trading volume in FY 2015-16, it has increased to 44 per cent till August 2021, according to the NSE's Market Pulse September 2021 report.

During the same interval, the share of foreign institutional investors almost halved from 23 per cent to 10.6 per cent, the report noted.

Retail investors, market observers say, have been diversifying their portfolios to new financial assets, marking a noticeable shift from investment in traditional instruments, like property, gold and bank deposits.

The number of new investors taking part in equity trading has shot up since August 2019 when 2.5 lakh people made their debut in the market.

Their numbers swell to 8.24 lakh in August 2020, and further to 14.9 lakh in August this year, according to market data. Retail investors, who come from tier II and III regions, have actively fueled the growth landscape of India, experts say.  

TECH, LOCKDOWNS, RATE CUTS

"There have been multiple reasons why this phenomenon has been catching pace," says S. Ravi, a former chairman of the BSE. "For one, the rising equity markets have been attracting a much larger audience and technology has made it easy for more people to make investments," he told India Today.  

Falling interest rates on fixed deposits following rate cuts by the RBI have also mobilised retail investors towards the equity market, he added.

According to the former BSE chief, the number of stock investors, including the retail ones, has risen to 10 million over the past three months, from June to September 2021.

The pandemic has also played a significant role.  

"Users from across the nation are consuming educational as well as entertainment-based content. This has also given a rise to financial influencers who, with their videos, try to educate their follower base about investing in the stock market," Deepak Singh, Chief Business Officer at Reliance Securities, told India Today.  

This user base comprises mainly the youth below 25 years of age, who learned about investing during the lockdowns, Singh added.  

Other factors such as simplified KYCs for account opening, innovative mobile apps that facilitate investments and a higher number of IPOs have also accelerated participation of individual investors in Indian markets, experts say.

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