When it comes to investment, numerous options like mutual funds, fixed deposits, etc. are available. Generally, it has been observed that people prefer less risky options like fixed deposits. But, recently in India, a new trend has been observed and that is increasing investment in the stock market.
As per the report, in FY21, a number of new accounts that are opened at CDSL reported 122.5 lakh and 19.7 lakh at NSDL. The other interesting thing that is noticed is people living in smaller cities and towns are also inclining more towards the stock market.
The share of individual investors in total turnover on the stock exchange has reached 45% from 39% of march 2020 as per the data of NSE. Surely, Indian millennials are going for stock market investment and are ready to take risks. But, why this has happened? What can be the factors that are responsible for this trend?
Following are the expected factors for it:
Global economy:
Other countries’ economies and stock markets do impact India’s stock market. If we talk about global economies, then restrictions have been lifted from these countries and they have almost resumed to normal. So, this can be an affecting factor.
Decreased interest rates:
On fixed deposits, the rate of interest has been reduced. It is around 2.9 to 3.4%. Along with it, the other schemes like Sukanya Samriddhi Yojana, Fixed deposits, etc., provide returns at 6 to 7%, which is lower.
Increase in market capitalization:
India currently ranks eighth on the table of most-valued equity markets, ahead of Germany which has a market cap of $2.8 trillion. In May 2021, India’s stock market capitalization reached $3 trillion. Countries that have market capitalization are the USA, China, Hong Kong, Japan, UK, France, and Canada.
Home effect:
During the pandemic, people were forced to remain in their homes. It is easy to invest in the stock market online by opening Demat accounts and that too at the comfort of home. So, it can be the reason.
Technology:
Today, an individual can easily get information on any topic for free. On Youtube also, many videos are available relating to the stock market. Apart from it, different free webinars are conducted relating to the stock market, cryptocurrency, etc. As India’s young adults are greatly familiar with technology, this can be an important reason for increased investment in the stock market.
At last:
In recent times, we have seen an increasing trend of investment in stock markets. But still, we have to see whether this trend is temporary or for the long term. The increasing interest of individuals may help in financing India’s infrastructural requirements in the future.
Follow and connect with us on Facebook, LinkedIn & Twitter
