Ok ,I know what you’ll say – a country of 1.38 billion people and less than 4 percent of the population have brokerage accounts a significant portion of that don’t actively invest but can it be that it is a starting of growth of investor population in India? Well recent data suggests says so.
India’s top stock brokers such as Zerodha and Upstox have seen a tremendous growth in demat account openings with total account numbers rising from 1.6 Million pre-lockdown to more than 6 Million and the numbers are on the rise as we speak.
Both discount brokers (private brokers) as well as full-fledged brokers have seen a rise in demat account openings with data showing that millennials are ahead of all with the highest share of accounts. This is an extremely reassuring news that more youngsters have given financial learning a priority and many are eager to secure financial freedom.
India’s technological boom ,rise in number of internet users and motivated mindset have all the credit for this. When we look at data for all the states the state with most brokerage accounts in Maharashtra – which is topping the chart for many years now with more than 1.49 crore accounts with Gujarat coming in second which has more than 85 lakh accounts and Uttar Pradesh coming in third with more than 52 lakh accounts followed by Karnataka and Madhya Pradesh with more than 42 lakh and 25 lakh accounts respectively. Again when we look at the bottom of the list we have Lakshadweep with a meagre 480 accounts followed by Mizoram with 5900 accounts and Andaman & Nicobar Islands with 9700 accounts.
The covid-19 pandemic was the tipping point for this with major rise in account opening seen after the lockdown and the trend has not settled since.
But there are shades of grey in this as well as a greater share of these accounts are dormant and don’t trade or invest. Many in the wish for gaining profits quickly end up losing money and get disheartened and don’t try again. This has also led to the rise of dormant accounts. This indicates that financial literacy has not kept up with the pace of incoming individuals in this field and has resulted in fear ,uncertainty ,doubt.
Which prompts us to ask another question – Will this lead to a downfall in the number of people who invest in stock market? Well ,the answer is NO. Financial literacy has started to pick up amongst youngsters. Daily we can see a large number of Instagram accounts ,YouTube channels and websites spreading knowledge about stock market – granted not all of them are legit but those who really are have a good follower base and are constantly expanding day-by-day.
This will lead to a rise in informed and learned trader/investor who has practical knowledge about the market and is not afraid to take decision but is also cautious while doing it.
All in all one can say that road ahead for stock market investors in India looks bullish.