NEW DELHI: Indian investors, old and the new comers who started equity market in large numbers, stuck to established large-scale for longer period of time as the Covid -19 disaster create damage, bringing economic activity to grinding halt.
As per the brokerages reports across the globe there is rapid rise in number of clients, as the investors decided to immerse in stocks utilizing staying indoors and got more free time to follow the market. Trading volume and other factors to rose accordingly.
The Indian’s largest brokerage namely Zerodha based in Bengaluru, said there is flood of opening trading accounts which spikes to 100 per cent from pre-lockdown levels.
With recent calculated data the daily average trading volume drift to 8.5 million, showing an increase of over 80 per cent from regular levels.
The Founder and CEO at Zerodha said “We attribute this to the fact that people working for homes had a bit of extra time, which they used to reconfigure their personal finance”
Online share trading start-up – Upstox, reported doubling of average daily orders as the progressive client’s base reached up to 30 per cent since the beginning of the lockdown.
By Shrini Viswanath, Co-founder and CTO there are around 75 per cent of the newly register customers were in the age group of 18- 35 years engaged from tier-2 and tier-3 cities which shows better financial awareness in smaller cities.
Asia oldest equity bourses BSE, witnessed a huge influx of new account openers, which make it cross the 5-crore mark in registered customers in May.
As per the recent data collected and the reports in the exchange website showed much of the new account openers from the smaller towns in states like Telangana, Arunachal Pradesh, Bihar, Mizoram and Himachal Pradesh, who are identified as the newest in equity trading.
The above listed states are recorded the biggest year-on-year growth in equity investor additions during this period.
Stock investors mostly stuck to large scale even though these stocks performed at par with broader market. With the declaration of lock down in India on 24th March 2020, 30 share Sensex added 30 per cent. Where the BSE Midcap index has risen 27 percent and BSE smallcap index 29 per cent.
As per B Gopkumar, MD and CEO of Axis Securities said that people are sticking to laregecaps where 80-85 percent are not moving out of this segment. He added even the average holding period rise up, thanks to which delivery volumes on the exchange moved from 26 per cent to 35 per cent in month of April. Following this new trend helped stockbrokers, especially full-service players, rack in more revenue from delivery trades “We do not make money on intraday and F& O trade. It has a very small weight. The rise in delivery volumes in cash market has driver of more revenue”, he said.
The Global lockdown has brought many problems, led to pay cuts, jobless and closure of businesses which is pain-full for policy makers and business executives across the country. But this is not same for the stock traders, the lockdown period tuned out to be a blessing in disguise for broking houses, as they saw a huge flood of trading volumes and customers additions resulting in better revenue growth even in a down market.
During the lock down period there was around 45 per cent increase in trading volume of Axis Bank subsidiary.
Ashish Rathi, Head of Risk and Compliance HDFC Securities speaks out of 22 per cent growth in trading volume between February and April in cash market. HDFC saw a 61 per cent growth in average daily traded clients in month of April as compare to February.
High growth potential
As per the analyst said low-level stock buying in the hope of good profit compared with bank savings or fixed income products drove new investors to stocks. Over the past few month the banks have lowered the interest rates on deposits after RBI slashed its rates.
People who invested in the lockdown period have been proven right, as the equity benchmarks have risen sharply from March.
The investors used the lockdown period to enter the market at attractive prices. They have seen earnings from the market as an alternative source of earning money in these crises time of Covid-19. Also, the reports suggested similar behavior among average investor in countries like China and Philippines.
The investor and the stock brokers of India are not sure if this trend is going to continue for longer period of time. It remains to suspense how long does this surge in activity plays out, “said Kamath.