India’s retail equity market is on a swing and is on course to get bigger on the back of a boom in savings, Raamdeo Agrawal, Chairman of Motilal Oswal Financial Services, said on August 21.
The country's gross domestic savings are expected to grow to $103 trillion over the next 25 years. This number was around $12 trillion in the last 25 years, he said at Motilal Oswal Annual Global Conference.
There has been a spurt in demat accounts with more and more individuals entering the securities market. The number of demat accounts shot up to 123 million in July 2023 from 41 million March 2020. This is expected to double to around 250 million by 2028. And, that will be 17 percent of the entire population, Agrawal said.
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SIPs too are on a rise from around Rs 86 billion in March 2020 to Rs 152 billion in July 2023. “Risk is distributed across the country when more retail investors join the market,” he said.
One of the key reasons for the retail equity revolution was the market regulator Sebi's move to ease Know Your Customer rules during the pandemic, allowing for easier entry into the equity market. He further said that emergence of more discount brokers is another reason for increased retail participation in the stock markets. “Discount brokers are very aggressive in acquiring customers and they’re not looking for profits in the near term,” Agrawal said.
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Private equity firms and venture capital funds see an unprecedented rise in India, whereas the IPO market remained restrictive. Agrawal suggested some actions from the regulatory side to see more growth in the IPO market. He suggested that promoter shareholding should be lowered to 65 percent from 75 percent and steps should be taken to ease the PE investors to exit.
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