In 2021, India acquired a place in the world’s top five countries in market capitalization. In March 2021, India’s total market cap reached $3.21 trillion. This surge in the Indian stock market is significant for a country that did not consider equity investment as a safe and viable option.
India’s recent stock market boom has several reasons. The key reason, however, is the internet and the fintech revolution.
Internet & Digitization – A catalyst to India’s stock market boom
India has the second-highest internet users in the world. The internet & digitization has crucial role to play in popularising stock trading. Stock trading was meant for a select few with the know-how and means to make good trading decisions. Others considered the stock market a risky and costly investment avenue with no transparency in market information.
The internet and digitization led to democratization of knowledge, reducing the misunderstanding around stock market trading. Thanks to a trove of information, investors today understand the risks, benefits, and approach toward stock market trading better. Moreover, with social media, conversations around stock trading have become frequent. This kind of knowledge and experience sharing has benefited the Indian stock market.
How did the pandemic lead new investors toward stock investments?
The pandemic nudged this revolution further. According to data published by Central Depository Services Ltd. (CDSL) and National Securities Depository Ltd. (NSDL), total investor accounts rose by a record 10.4 million in 2020. The importance of savings and investments was realized by many. People started looking for other sources of income. Low-interest rates made the traditional options of bank deposits and other small investments unattractive. Thus, people started looking at the stock market. The market crash of March 2020 allowed new investors to start trading in a dip. The strong recovery in April and May 2020 strengthened investors’ sentiments and boosted their confidence in the stock market. The recent fintech development in the country was a blessing in disguise. The internet and brokers with an active online presence, like Bajaj Financial Securities Ltd. (BFSL) have facilitated new investors to open Demat Account and participate in the stock market conveniently.
The role of discount brokers
The discount brokers have been pivotal in the stock market boom. The stock market was ready for new investors, and the pandemic made new investors ready for the stock market. Discount brokers proved to be the crucial link between the two. Wider internet penetration allowed stockbrokers to boost their online services by offering user-friendly investing through the web and apps. Investors today can open a Demat and trading account with a stockbroker of their choice online within minutes through a digital process.
Rising stockbrokers like Bajaj Financial Securities Limited let investors open Demat accounts free of cost. They charge lower brokerage rates compared to other discount brokers. Many investors choose BFSL to trade in the share market for several reasons.
Below are the major facilities that BFSL[RT1] offers:
– Specifically designed subscription-based trading plans for beginners and professionals
– Free Demat and trading accounts
– Multiple investment products
– Low brokerage starting Rs.5/order in the Bajaj Privilege Club plan
– Secure trading platform
– Low interests in margin trade financing (MTF), with up to 3.5x leverage
New investors with limited knowledge can educate themselves with the help of a myriad of free courses available on the internet. These courses built by experts have helped people understand investment strategies that were earlier restricted to finance classes in business schools. A new breed of influences called finance influencers helped spread financial knowledge in an easy-to-understand way through quirky formats.
The stock market rally that started in 2020 continued in 2021 as well. SEBI’s data showed that Demat accounts doubled between 2020 and 2021. 2021 was also the year of big-ticket IPOs.
The economic growth is expected to boost Indian companies’ earnings. And with the support of technology and new investors, the Indian stock market is fuelled and ready to take off. Backed with wise decisions, investors can reap the benefits from the many opportunities that will emerge in the share market.
“As subject to the provisions of SEBI Circular CIR/MRD/DP/54s/2017 dated June 13, 2017, and the terms and conditions mentioned in rights and obligations statement issued by the TM.(if applicable).”
“Investments in securities markets are subject to market risks, read all the related documents carefully before investing.”