Ravi Kumar, Co-Founder and CEO at Upstox, in an interview to Moneycontrol’s Sunil Shankar Matkar, said a lot of people used pandemic as an opportunity to enhance their financial knowledge and diversify their portfolio in FY21.
As a result, a record number of demat accounts were opened in FY21. Retail investors have now experienced the ease and efficiency with which anyone can trade in the stock markets, he added.
Hence, he strongly believes that this trend is here to stay and it’s not just a lockdown phenomenon.
Edited excerpts:-
Q: There was huge participation from retail investors in FY21. Do you expect the same trend to continue in this fiscal?
In FY21, while the pandemic had a significant impact on society at large, a lot of people used this opportunity to enhance their financial knowledge and diversify their portfolio. As a result, a record number of demat accounts were opened in FY21. This was mainly due to growing financial awareness, easy internet access, rising interest in equity participation, and digital trading platforms that offer intuitive technologies at flat brokerage fees.
Retail investors have now experienced the ease and efficiency with which anyone can trade in the stock markets. Hence, we strongly believe that this trend is here to stay and it’s not just a lockdown phenomenon.
The easy-to-use mobile trading apps with advanced tools and options allowed 100 percent online account opening, which motivated a lot of people to take the first step in trading. This has resulted in a significant number of them wanting to be part of the equity markets. Since January 2021, Upstox has added more than 6 lakh demat accounts.
Q: Can you elaborate the trends that you witnessed in FY21 and what new trends can be seen in FY22?
A major trend being observed among retail investors is the rise in mobile trading. More than 85 percent of Upstox customers place their daily trades through the mobile app. This trend continues well into 2021, backed by increasing use of smartphones, improving internet connectivity and investor awareness.
At Upstox, we have witnessed a nearly 4x jump in accounts opened by women since last year. Of these, more than 75 percent are first-time women investors, about 60 percent are millennial women, and more than 35 percent are housewives.
Another trend that we believe will continue is the rise in the number of young customers. More than 75 percent of our existing customer base is below the age of 35. We want to be the partner of choice for the new generation of traders and investors in smaller towns and expect to add 2-3 lakh customers per month, backed by cutting-edge technology and seamless user experience.
Q: What is the mood at retail investors’ desk now given the volatility and nervousness in the market?
The second wave of COVID-19 in India along with vaccine supply issues have caused volatility for some time now. Based on our experience in the previous quarters, we expect some stock-specific action around the ongoing earnings season. With the government and administration working hard to control the onslaught of the pandemic, we hope the economy will soon see full recovery.
Q: What was the trend in the overall brokerage industry in terms of market share and growth in FY21. And do you expect the brokerage industry to see massive growth in market share and growth in FY22?
The digital onboarding of clients, as well as a wide untapped market in the retail sector, favourable demographics, growing financial literacy, and increasing internet penetration have enabled fast growth across the brokerage industry.
However, in terms of equity participation, India is still an underpenetrated country. The participation of retail investors in Indian bourses is significantly lower than their comparable global peers. A high percentage of them are now educated and aware of the stock markets and want to participate in the markets.
Q: Can the mood in market change in the second half of FY22 and can we expect the year to end with strong double digit gains?
You would agree that the situation is quite dynamic. It would be hard for anyone to make projections at this point. However, like everyone else, we are hopeful that economic activities will ramp up as we go further into the fiscal and reflect positively on the market.
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