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The NSE’s Market Pulse Report, which has a wealth of information on trends in the stock markets, now includes new information on trading by individual investors. For the past few months, the report has separately called out the share of individual investors in total trading.

In the cash equities segment, their share has risen to 45% in fiscal 2021, compared to 38.8% in the preceding year. In absolute terms, their average daily turnover (ADT) nearly doubled last fiscal year. Note that turnover of institutional investors rose by a much lower 24%.

A rise in retail trading activity has been witnessed globally post-covid. To start with, restrictions to tackle the pandemic gave people more time on their hands, and many fence-sitters rushed to the stock markets. What also helped the process was the crash in the markets, which made many stocks highly affordable.

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Satish Kumar/Mint


But there’s more to the surge in retail trading than just the covid push, point out discount brokers, who have made the most of the increased interest, with massive market share gains. “Digital brokers have broadened the market, as they penetrated deeper into tier-2 and tier-3 towns. For Angel Broking, around 90% of new customers came from beyond tier-1 cities. Also, external factors such as rising savings, easier access to smartphones and more affordable internet packages have facilitated this growth momentum," said Prabhakar Tiwari, chief growth officer, Angel Broking. Leading digital brokers such as Angel, Zerodha, Upstox and Groww have cumulatively more than trebled their active client base in the past year, NSE data shows. The share of the four firms stood at 44% in March 2021 in terms of active clients, compared to 26% a year ago. To expand their reach beyond leading cities, some digital brokers have offerings in regional content as well, apart from multiple trading platforms including some that deploy algorithmic trading strategies.

Tiwari also said that a majority of new clients are relatively young, who are looking to diversify their investments and income streams. Another catalyst was the roaring IPO market last year, with the majority of issues listing at a huge premium to the issue price.

“India is a highly under-penetrated country with equities forming a very low portion of an individual’s savings," added Tiwari. While there may be high scope for continued growth, the momentum gained post-covid has been reducing. The NSE data showed that the share of individual investors in turnover peaked at around 50% in July last year and has since then steadily declined to 41.8% in March 2021.

The IPO market is no longer hot, and there has been no major correction in stocks after the second covid wave. There isn’t enough action on the Street to draw fence-sitters like in the previous year.

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