Sharing his views on how sentiment is running high on retail money, online stockbroking firm Zerodha's chief executive officer (CEO) and co-founder Nithin Kamath in a recent tweet on July 15 said that free time due to lockdowns and low bank deposit rates are the key factors in bringing many retail investors to D-Street.
Market veterans time and again have reminded that ‘there is opportunity in every crisis’. Well, the phrase had no or little meaning for retail investors until 2020.
With time on their side, the lure of making extra money amid the COVID crisis, and plenty of knowledge flowing on the web pushed many new-age investors to join D-Street. Benchmark indices more than doubled after hitting a bottom in March 2020.
Indian investors opened a record 14.2 million new demat accounts in FY21, a nearly three-fold rise from the previous year's 4.9 million, according to the data from the National Securities Depository, and Central Depository Services.
A spillover effect was seen across discount brokerage firms such as Zerodha. Kamath charts the journey of growth in retail investors’ new accounts that rose from 1.9 mn in January 2019 to about 6 million when Nifty50 is trading at its peak.
“The last 18 months at Zerodha have been eventful, to say the least. Historically, market crashes caused panic & reduced activity. But this crisis led to a rush of new customers looking to buy into stocks on sale. Free time due to lockdowns & low bank deposit rates helped,” Kamath said in a tweet.
“Once this younger bunch of first-time investors saw quick profits, they started spreading the word and got their friends & family to invest. Market outperformance has led to continued momentum in user growth until now. It all felt like magic, we did nothing different,” the tweet added
“The most underappreciated aspect of building a successful business is just how important being at the right place and the right time is. All you can control is how you build your team & hence the products. Everything else is pure randomness & luck,” explains Kamath.
Last week, online brokerage firm Zerodha in a tweet said it had seen a rush of users looking to cash in on the IPO wave early.
With many users looking to apply for various offerings, the online brokerage firm thought it was best to share the most common phrase used by its users last week.
"The most used phrase on calls and tickets at Zerodha this past week: "Please open my account as soon as possible. I want to apply for an IPO," it said in a tweet.
Also Read: Chiming in with IPO buzz | Zerodha shares the most common phrase by users last week
Well, Zerodha is not alone which has witnessed an influx of retail investors.
The second-largest discount brokerage Upstox, backed by Ratan Tata and Tiger Global, says more than 70 percent of its over 4 million customers are first-time investors.
Most of the first-time investors which have joined are under-36 -- something even traditional brokerages also back as there has been an influx of nearly 20 million new investors into the market during the pandemic year.
Upstox said more than 80 percent of its customers are from tier 2 & 3 cities-- traditional brokerage Angel Broking also has a similar percentage of its customers coming in from small towns and so are their age profile too, as the vast majority of them are under 30.
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