The year 2021 has been a magical year for the premier stock indices of the country. Bouncing back after a devastating second wave of the pandemic, the stock markets have soared to new heights, barring the ongoing momentary glitch. The reason behind the phoenix-like resurrection has been the rise of a legion of young investors that are much more aware and are using the technological platforms to invest their money to good effect.
Zerodha, India’s indigenous and largest online brokerage, has remarked that the platform handles 10 to 12 million orders on an average day with the major share of the pie coming from first-time investors under the age of 30, executing orders from the comfort of their smartphones.
Since the historic lows of March last year, India’s Sensex has risen about 119%, the highest among countries with stock markets worth $1 trillion or more – beating the likes of the S&P 500 and China’s CSI 300.
Also read: Indian SaaS startups continue their multi-billion dollar winning streak
Groww, an online investment platform established around 5 years ago, said that 94.53% growth was observed for first-time investors in 2021 till July as compared to last year. Its investor base is rapidly growing and has already crossed over 15 million customers.
Companies raising capital through common Indians and their investment
Earlier, the crunch of retail investors forced the companies to go to banks and other financial institutions for capital to start new operations. They were also dependent on Foreign Institutional Investors (FII) to raise good amounts of capital.
The common public, barring the tiny, minuscule population, barely took an interest in the stock market, deeming it to be dangerous, volatile, and one meant for the professionals.
However, if there is one good thing that has come out of the pandemic, it is the urge of a layman to discover a passive source of income. Stock Market and investment in it fits the bill for passive investment, for most.
India adding half a New Zealand as investors in the market
As a result, the retail investors put Rs 86,000 crore into India’s National Stock Exchange’s cash market this year, compared with Rs 51,200 crore in 2020.
Also read: With Digitisation of Stock Markets, Retail Investors are brewing up a revolution
In early 2020, India was adding 400,000 investor accounts every month, according to its market regulator. In 2021, that number has grown to about 2.6 million, about half the population of New Zealand.
Startups and their IPOs’ contribution to the investing spree
Moreover, India’s growing startup ecosystem, which is now churning one unicorn after another, is playing a key part in building new investors. 2021 has been a sensational year for the Indian startup ecosystem, which has surpassed all projections — both in terms of the number of unicorns and the funding raised.
Till December, 43 unicorns have been born in the country with Pristyn Care being the latest. Overall, India now houses 79 unicorn startups. Not only this, the unicorns have been able to take the next step by going public as well.
A slew of IPOs released by Dalal Street this year found interest of the ‘no-nothing-investors’. Paytm became the country’s largest IPO ever with an issue size of 18,300 crores, with other companies like Zomato, Policy Bazaar, PharmEasy and Nykaa also coming up with their respective IPOs.
Also read: Zomato, Paytm IPOs show the tremendous strength of India’s startup culture
Although Paytm’s listing wasn’t as royal as many would have predicted, it still showed that the no-nothing investors were betting on the future of such companies to yield the profits.
The young don’t have the financial baggage and have a knack for learning rather than blindly betting, and thus, they can go head-on, take the risks, face volatility by betting for the long term and invest their money freely in the current bull market. It is the golden period of Indian investment scene and the youngsters have only just begun.
