Barpeta, a district in Assam that was among the worst affected by last year’s floods, has been one of the largest sources of new stock market investors this year. Since March, Barpeta has been among the top 10 districts, making up about 0.8% of new investors in August, according to NSE data. Telangana’s Ranga Reddy district (former Hyderabad rural) is among the other toppers, also contributing about 0.8% of new investors in August.
Though Delhi and Mumbai contribute the highest share of new investors (5.9% and 5.8%, respectively in August), smaller cities like Surat and Ahmedabad are registering a significant number of investors.
Paperless KYC and fully digital onboarding by stockbrokers are among the key factors that are blurring the divide between metros and tier-2 and-3 cities. “For the last 8-9 quarters, we have been seeing a rising trend of people coming from tier-2 and -3, it got accelerated during Covid. Before digitisation, we were serving only about 30% of India. So, the surge is from the new population that is getting access to the market,” said Dinesh Thakkar, CMD of Angel Broking, which added about 24 lakh new investors in FY21, a 4x jump over the previous year.
Easy access to information, low-cost brokerage, and quick fund transfers made possible by UPI are among the contributors that have boosted retail participation in the stock market. For example, a 24-year-old liberal arts student at Ashoka University, who had never issued a cheque, or visited his bank branch, was able to open a trading account with an online discount broker seamlessly last year after being referred by a friend. Interactive charts and the app’s ‘gamified’ user experience make the process easy to understand, the student, who didn’t wish to be named, said.
Aided by the market rally, about 1.4 crore new demat accounts were opened in FY21, a nearly 2x jump over the previous year. The share of individual investors in the cash market turnover too went up to 45% in FY21 from about 39% in FY20, according to NSE data.