Increasing retail participation in stock markets: SBI report

Lockdown has led to more retail participation in stock markets in India

The coronavirus pandemic induced lockdown since March 2020 has forced millions of people to remain confined to their homes, and has severely dented household incomes, increasing retail participation in the stock market as many people Turned to business.

According to a study conducted by the State Bank of India (SBI), increased retail participation, if it becomes the norm, could also enable a larger resource pool to finance India’s infrastructural needs.

Also, SBI notes that it is yet to be seen whether this increasing retail participation is a transitory phase or the beginning of a long-term behavioral change.

“Higher retail participation has led to increased investment in stocks and mutual funds in the second half of 2020-21 and this higher retail participation in stock markets may become a self-fulfilling prophecy. The number of individual investors in the market is 2020-21 142 lakh in the year, 122.5 lakh new accounts in CDSL and 19.7 lakh in NSDL,” the SBI report said.

Also, another 44.7 lakh retail investor accounts have been added during the two months of the current financial year. Also, as per NSE data, the share of individual investors in the total traded on the stock exchange has increased from 39 per cent in March 2020 to 45 per cent.

Citing an example, the study elaborated that the share of savings in shares and debentures in total household financial savings, which stood at 3.4 per cent in the financial year 2019-20, is likely to increase from 4.8 per cent to 5 per cent in 2020-21. is. of total household financial savings, reflecting a significant increase in household participation in equity investments.

The report further noted that with stories from the Indian financial ecosystem there is a renewed interest in healthcare stocks and of course financial stocks, which are effectively acting as a conduit of large liquidity finding investment avenues. Huh.

“The lower rate among other savings avenues amidst the low interest rate regime has led to greater interest by individuals in the stock market. Another reason could be a significant increase in global liquidity,” it said.

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