First-time investors with high risk appetite allocating over 70% portfolio to equity, shows StockGro survey

New-wave of first-time stock market investors has doubled in six years, reveals survey

The retail frenzy in Indian equities has resulted in the number of demat accounts doubling since the pandemic, adding a significant number of first-time investors with higher risk appetite allocating over 70% of their portfolio to equities, a survey of 50,000 participants by financial education platform StockGro has revealed.

The survey has highlighted a significant shift towards equities among households, with 45% of young investors - those below 30 years of age - prioritizing equity as their main investment choice. These risk-taking, Gen Z investors with less than three years of experience in investing have allocated more than 70% of their portfolio to equity, showed the survey findings.

However, there is a rising commitment to financial stability, noted the survey, with 42% of investors focused on long-term wealth creation, and 32% seeking passive income through their investments.

StockGro confirmed findings of a Sebi report last year that showed risks associated with derivative bets, with 90% of surveyed traders incurring losses, as F&O activity surge by 500% compared to FY19-21.

More Aware Investors

Households are increasingly shifting towards equities and higher-yield investments, supported by ease in accessibility through introduction of electronic trading platforms (like NSE Now and BSE Star). Besides, innovative financial products and enhanced financial literacy initiatives under BSE's Investor Protection Fund along with NSE's investor service centers in smaller towns are bringing financial opportunities closer to regional investors.

Exchange-traded funds (ETFs), derivatives, and index funds have gained popularity among the new investors, the survey showed. The Reserve Bank of India (RBI) has been proactive in promoting financial education through financial literacy initiatives, with private entities too stepping up.

Rush for Equity Investing

StockGro's survey also underscored data that showed that mutual fund AUMs (Assets Under Management) have tripled to Rs 67 lakh crore after the pandemic, driven by robust inflows and asset appreciation. The equity culture saw demat accounts soar since the pandemic, along with a strong interest in primary market issuances during 2024.

Alternative investment options such as Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) are gaining popularity, showed the survey, offering a blend of real estate benefits and stock market liquidity. REITs registered a growth rate of 31% on-year in 2023, reflecting increasing investor confidence in diversified asset classes.

Over 80% of respondents said they monitor stock price trends regularly, with 69% checking updates daily and 22% only a few times a month. Despite the widespread interest, the actual investment participation remains lower. As India’s demat accounts crossed over 10 crore, the potential for growth is significant, StockGro said.

The survey showed 37% of investors favoured stocks and mutual funds, with 41% of prospective investors continuing to rely on bank deposits as primary savings option – a preference for low-risk, low-yield avenue.

India’s stock market grew at a 9% CAGR from FY95-20, but post-Covid, the retail participation soared at a CAGR of 26% (FY20-24) and 25% (FY23-24), highlighting rising confidence among retail investors.

Rising Women Participation

Democratization of investment opportunities has resulted in a rising share of women individual investor, with registrations rising to 23.9% in FY24 compared to 22.6% in FY22. Initiatives like the Pradhan Mantri MUDRA Yojana saw nearly 70% women beneficiaries last fiscal year.

The StockGro survey indicates that 63% of women have received some financial education, but only 23% feel highly aware of the stock market - a confidence gap that often translates into more conservative asset choices compared to men.

As many as 30% of women with a Master’s degree or higher said they are more likely to invest, yet cultural and economic factors continue to hold them back. The gender pay gap is now mirrored by a ‘gender investment gap’, said the survey, as women’s workforce participation stands at 33%—far below the global average of 50%.

Many women gravitate toward gold, silver, or real estate for stability, reflecting both traditional saving norms and limited market confidence.

Scope for Growth

Between 2013 and 2024, equity exposure of Indian retail investors increased from 2.2% to 5.8%, but equities still amount to less than 5% share in the total household assets. This dual reality - enthusiasm among younger investors and caution among traditional savers - defines India’s evolving investment culture, StockGro’s report concluded.

The survey found that 93% of respondents tracked the stock market, but only 81% invested, citing poor understanding as the primary reason, followed by cash constraint and loss aversion.