Retail investors' interest in the Indian securities market has sharply increased to an average of 2.45 million Demat accounts opened per month during April-June, Sebi chief Ajay Tyagi said on Thursday.
The prevailing low-interest rates and ample liquidity availability are the major factors for the increased investors' interest in the securities market in India, he added.
He warned that tightening of liquidity or an increase in interest rates would impact the market.
"However, it also needs to be acknowledged that by their very nature, the markets are forward-looking and the present investments take into account the future growth prospects," the Sebi chairman said.
Speaking at NISM's second annual capital markets conference, Tyagi said retail investors' interest in the Indian securities market has increased from 2020-21 onwards.
The cumulative number of total Demat accounts increased from 41 million at the beginning of FY21 to 55 million by the end of FY21, an increase of 34.7 per cent.
On average, about 1.2 million new Demat accounts were opened per month in 2020-21 as compared to 0.42 million per month during the preceding fiscal, he said.
"The trend gets further accentuated during the current financial year -- on an average 2.45 million Demat accounts have been opened per month during April-June 2021," he added.
Equity cash market turnover increased from Rs 96.6 lakh crore in 2019-20 to Rs 164.4 lakh crore in 2020-21, a rise of 70.2 per cent. Moreover, the share of individuals in turnover grew by around 5 percentage points to 51.4 per cent in 2020-21 over the previous fiscal.
According to Tyagi, the larger share of trades originating from mobile devices and internet-based trading in the total turnover is another indicator of increased retail participation.
Despite being a pandemic affected year, a total of Rs 10.12 lakh crore was raised from the capital markets in 2020-21, surpassing the previous fiscal's figure of Rs 9.96 lakh crore.
He also acknowledged that initial share-sales, REITs (Real estate investment trusts) and InvITs (Infrastructure investment trusts), ESG (environment, social and governance) themed mutual fund schemes and exchange-traded funds (ETFs) have caught the fancy of retail investors.
According to Tyagi, there has been a surge in ESG based mutual fund schemes in India in FY21. He also said that the number of NFOs having ESG theme shot up by 300% in FY21.
As regards ETFs, SEBI Chairman said that the proportion of AUM under ETFs to the total AUM under mutual funds has increased to 9% at the end of FY21 from 2% at the end FY16. ETF AUM has almost doubled to Rs 2.8 trillion at the end of FY21.
The initial public offer (IPO) market has seen robust fundraising activity in 2020-21 and the ongoing fiscal.
"Along with the robust growth, it is heartening to note that our markets are entering a new era with several new-age tech companies preferring to list domestically. Our markets offer as attractive a fundraising proposition as any overseas market," Tyagi said.
Recent filings and public offerings reflect the maturity of the Indian market to accept the business model of new-age tech companies, which are not amenable to valuation through conventional metrics of profitability, he noted.
Moreover, successful IPOs of such companies are likely to attract more funds in domestic markets; thus creating a new ecosystem of entrepreneurs and investors, he added.
The Sebi chief said the regulator has taken several measures to facilitate the development of capital markets and improve their robustness for attracting more investors.
Online KYC, several policy measures for ease of fundraising by listed entities, and the decision to introduce the "accredited investors" concept are among the steps taken for the development of the capital markets, he said.
In addition, the regulator has taken several measures towards creating awareness among investors.
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