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Retails investors are riding the equity market rally in US and most of the emerging markets like India too have seen the same trend. The investing is also in line with heavy borrowing or margin debt which may impact their holdings in correction.

"Spike in retail activity signal a market top? This trope keeps coming up whenever there's a market drop like the current one. While it makes for a great narrative, it is impossible to call market directions," Zerodha founder Nithin Kamath tweeted.

Kamath, in an interview he shared, says most of new users are under 30 years, and they are trading with small amounts. So, the mistakes they make won't be too costly and it is probably the best way to learn as the impact of money mistakes is lesser.

Further, Kamath said, in India, there is not as much leverage in the system compared to the US and hence most of the investors are buying stocks by paying up the entire money upfront.

"There are two ways to look at the scenario. It is definitely a concern that many new investors are entering equities without completely understanding the markets, but on the other hand as there is not much capital with young investors below 30, the money mistakes are great learnings," Kamath said.

Nithin Kamath further said Zerodha had about 2 million customers in January, but the figure has grown to 8 million post the coronavirus pandemic. Of this, over 70% of them are young investors under 30 years.

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