There is a significant gap in equity investments in the country compared to the total population. Currently nearly 7% of India’s population has access to equity markets, as against over 14% in China and 65% in USA. With approximately 65% of India’s population residing in non-urban areas, which is largely under penetrated, this forms a large addressable market. This gap can be reduced through active participation of people investing in different asset classes.
In the past few years, the Indian stock market has been buzzing with investments from a wide range of investors. One standout feature of a relatively rapid influx of investors in the stock market investments is the role played by millennials. In the calendar year 2020, Demat accounts in India increased by more than 10 million. Young investors primarily drive the rise in investor accounts.
The overall increased interest of millennials in equity investing can deepen India’s capital markets, as this new cohort diversifies their investment avenues from the conventional low risk, low return yielding assets. With advanced technologies, new-age stock broking companies are building a community of smart investors. Below are the critical factors which are aiding and accelerating community of smart investors:
Millennials are receptive to new-age technologies
In the fintech revolution era, asset management, investments, security analysis and portfolio diversification can be carried out with the help of advanced and sophisticated apps controlled from a smartphone. Due to the receptive nature of millennials towards latest technologies, they have found innovative ways to make their investments work and grow over time at a better rate as compared to their risk-free assets.
Millennials make investment decisions on credible information
Rather than relying on tips, millennials seek credibility of information before making an investment decision. With the availability of sophisticated tools (provided by new age brokerage houses) that offer easy access to fundamental and technical analysis, the overall process of investment decision-making has become faster and more reliable than ever.
The quality of investment services has improved significantly
The entire process of stock market investments has undergone a 360-degree change in the past decade. AI and Blockchain have opened a lot of avenues to improve trading eco-system such as faster settlements, real-time monitoring, improved insights, and enhanced security measures. In addition, transparency of operations adopted by brokers have ensured that the best quality of services is offered to their clients. It builds greater level of trust with the new age investor.
Research and data related to markets, companies, and stocks is more accessible than ever
The overall availability and quality of information and research have increased at an unprecedented rate due to analytics. Millennials now have unrestricted access to primary and technical analysis and interpretation of such information. Furthermore, a number of third-party services like 1) smallcase: a pre-defined basket of stocks, 2) streak: simplified technical analysis, 3) sensibull: simplified option trading, are now integrated by brokerage houses and offered to the clients to improve their entire stock trading experience.
Overall environmental (economic) impact
The low-interest rate regime, coupled with positive sentiments with respect to the economy’s performance in the long run, is driving the highly-optimistic millennial investors. This class of investors believe in the fundamentals of the Indian economy and have a relatively long-term approach toward stock market investments. Even though there are uncertainties and volatility in the market, millennials can use a wide range of tech-enabled risk management tools to manage such risk.
Millions of millennials are piling investments in Indian stock markets through different instruments. This class of investors is far more educated, and better understand the volatility in equity investing. They are eager to further enhance their intellect about the market and make the best use of available technologies for retrieving credible information to make an investment decision. This community of smart investors in the country is expected to positively consolidate the situation of retail investors and create an entire generation of new-age investors with no scepticism towards stock market investments.