Poor Indians At Risk in a Volatile Stock Market
Huge returns on Stock Markets last year have lured millions of Indians into investing in equities abetted by easy to invest app-based platforms online. According to the latest data released by the stock exchange regulator SEBI, the number of retail investors has reached 1.85 crore by the end of 2021. Resultingly, there share in total investment in equities has reached 7.32%, a record.
Finance Ministry officials, Niti Aayog mandarins and even Reserve Bank of India official reports are quoting this phenomenon as a newfound trust in the equity markets and rising prosperity in the country. The fact is that there is 14% of all stocks on the float in the market and the individual investors have not been able to buy half of that share. A casual glance at the same data reveals that lower middle-class Indians are risking their savings in a market which is become highly volatile showing instability due many factors which are not in the hands of the regulators. According to the data more than 70% retail investors have an annual income of less than Rs 5 lac and they hold 28% of the equities from about 4000 listed companies on the stock exchanges. The bulk of equity investments are still in the hands of 3% individual investors who hold more than 41% of equities. These investors earn more than Rs 25 lakh per year..jpeg )
That individuals with low-risk appetite are now participating in the stock market is clear from the fact that nearly 9% investors who hold 4.5% stocks earn less than Rs 1 lakh a year, less than country’s per capita income. Many of these operate several depository accounts as the new app-based platforms boast of nearly 2 crore registered users and SEBI claims it has more than 9 crore registered users in total.
In a market where the market has gone up and down 10% at least twice within 3 months, the small investor is at highest risk for its lack of holding power. The SEBI too has constantly warned investors on its website and through individual text messages that unscrupulous traders maybe taking the investors for a ride.
There are 4787 companies listed with the Bombay Stock Exchange and trade is suspended in 998 companies. Some of the smaller companies, termed by traders as penny stocks, have shown huge returns - even more than 100 times- which are hawked by the unscrupulous players to lure the new entrants to the market.
The app-based trading platforms have few offices and not much by the way of redressal for thousands of people who have entered the equities boom from tier 2 and tier three towns. With little understanding of the market’s movements and its links to the global liquidity surplus, price of crude oil and geopolitical volatility, these are small investors who are at most risk.
Finance Ministry officials, Niti Aayog mandarins and even Reserve Bank of India official reports are quoting this phenomenon as a newfound trust in the equity markets and rising prosperity in the country. The fact is that there is 14% of all stocks on the float in the market and the individual investors have not been able to buy half of that share. A casual glance at the same data reveals that lower middle-class Indians are risking their savings in a market which is become highly volatile showing instability due many factors which are not in the hands of the regulators. According to the data more than 70% retail investors have an annual income of less than Rs 5 lac and they hold 28% of the equities from about 4000 listed companies on the stock exchanges. The bulk of equity investments are still in the hands of 3% individual investors who hold more than 41% of equities. These investors earn more than Rs 25 lakh per year.
That individuals with low-risk appetite are now participating in the stock market is clear from the fact that nearly 9% investors who hold 4.5% stocks earn less than Rs 1 lakh a year, less than country’s per capita income. Many of these operate several depository accounts as the new app-based platforms boast of nearly 2 crore registered users and SEBI claims it has more than 9 crore registered users in total.
In a market where the market has gone up and down 10% at least twice within 3 months, the small investor is at highest risk for its lack of holding power. The SEBI too has constantly warned investors on its website and through individual text messages that unscrupulous traders maybe taking the investors for a ride.
There are 4787 companies listed with the Bombay Stock Exchange and trade is suspended in 998 companies. Some of the smaller companies, termed by traders as penny stocks, have shown huge returns - even more than 100 times- which are hawked by the unscrupulous players to lure the new entrants to the market.
The app-based trading platforms have few offices and not much by the way of redressal for thousands of people who have entered the equities boom from tier 2 and tier three towns. With little understanding of the market’s movements and its links to the global liquidity surplus, price of crude oil and geopolitical volatility, these are small investors who are at most risk.
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