Ashish Chauhan, the MD and CEO of the National Stock Exchange (NSE), believes that India's recent economic strength can be attributed to two key areas: political stability and a well-developed social security system. We can see this economic growth in the number of new investors entering the Indian stock market.
What does this surge mean to India?
The NSE has seen a remarkable surge in retail investor participation. In just the last eight months, a whopping 1 crore new investors have joined the platform, bringing the total investor base to 8 crore. This surge shows that roughly 5 crore Indian families now have someone involved in the stock market.
That's 17 out of every 100 households in India, which is a big deal! It shows that more and more people across the country are getting interested in investing, representing 17% of the country's total.
Big cities aren't the only places this investor boom is happening. Almost half, that's 45%, of these new investors are from towns and villages outside the top 100 Indian cities. It is like the stock market is opening its doors to everyone, not just those in the big cities. It signifies a great sign for India's financial future.
What and when is the root cause of the surge?
The explosion of new investors in the stock market started during the COVID-19 crisis. When the market crashed in March 2020, it became a good chance for people to invest. It is because traditional investments like fixed deposits and bonds were not giving much profit compared to what the stock market could offer.
Even though the world was into problems like wars and economic slumps, India's stock market has stayed strong because the market did well after the COVID-19 crash. The Nifty and Sensex doubled in value during those tough times.
This performance convinced investors to stay invested even when things got shaky, and the Nifty's average return over the last 3 years has been a very impressive 22.66%, which is much better than what you would get from safe savings options like fixed deposits that can barely beat inflation.
On top of all, new technologies in finance (fintech) have opened ways for more hassle-free investing than ever before. This situation convinced a new generation of young investors, especially millennials and people who had never invested, to jump into the stock market.
8 Crore Investors, 7 Crore Taxpayers: Who's Missing the Market Boom?
There seems to be a mismatch - 8 crore people are investing, but only 7 crore pay taxes in India. This might make you think some people aren't paying taxes as they should. However, a closer look reveals a more clear picture. To qualify for KYC (Know Your Customer), investors need to do PAN (Permanent Account Number) registration to ensure transparency.
But there's a good reason why non-taxpayers can also invest today. The investor numbers include people who aren't the bread earners in a family, like women or youngsters. Even though they don't pay taxes, they can still invest. This shows that more and more people from all walks of life are getting involved in the stock market.
Is India Leaving Behind Its "Savings First" Culture?
The way people invest in India is changing dramatically. In the past, most Indians preferred to save their money in bank accounts, but now, more people are becoming investors, looking for ways to grow their money. We can see that in the popularity of Exchange Traded Funds (ETFs).
The daily average turnover of ETFs has skyrocketed nearly 11 times, from ₹46 crore in FY14 to ₹605 crore in FY23. Similarly, Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) saw notable growth also.
The average daily value of ETFs traded has exploded, showing a shift away from low-interest savings options. This trend suggests that Indians are getting more comfortable with the stock market and hoping to earn higher returns.
The NSE's Growth Trajectory
The Indian stock market is experiencing outstanding growth, fueled by combining political stability, social security measures, and a growing population of informed investors. The NSE, at the forefront of this transformation, will play a pivotal role in India's economic journey.
The recent surge in investors is a golden opportunity for the NSE. With more people joining the market, the NSE can grow its business by attracting more investors and offering new investment options.
With a massive 14.9 crore investor base, the NSE boasts much higher yearly trading volumes. In April 2024 alone, the average daily turnover at the NSE was nearly ₹14,567 crore, almost double the BSE's ₹6,298 crore.
While the exact NSE share price fluctuates, it trades around ₹4200. Industry experts predict continued growth for the NSE in India. Based on the above data and the comparison, if you buy NSE unlisted shares, count on Stockify. We are one of India’s trusted online stock trading platforms where you can buy and sell unlisted shares in India from the comfort of your home.
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