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Business News/ Markets / Stock Markets/  Number of BSE-registered investors see a jump of 27% YoY in 2023. What does it mean for the market?
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Number of BSE-registered investors see a jump of 27% YoY in 2023. What does it mean for the market?

The domestic market's remarkable performance in 2023 can be attributed to factors like a strong macroeconomic environment, anticipated rate cuts, increased foreign capital inflows, and a significant surge in the number of retail investors.

Data show the number of registered investors with BSE has jumped over 27 per cent year-on-year (YoY) to 3.3 crore in 2023. Photo: Abhijit Bhatlekar/Mint (Mint)Premium
Data show the number of registered investors with BSE has jumped over 27 per cent year-on-year (YoY) to 3.3 crore in 2023. Photo: Abhijit Bhatlekar/Mint (Mint)

The domestic equity market ended the year 2023 with impressive gains. The Sensex and the Nifty 50 closed the year with substantial gains, marking a notable uptick of 19 per cent and 20 per cent respectively. Notably, the mid and smallcap indices delivered exceptional performance, far surpassing the benchmarks. The BSE Midcap index soared by 46 per cent, while the Smallcap index surged by 48 per cent, showcasing remarkable market resilience and investor confidence.

The remarkable performance of the domestic market this year can be attributed to several factors, including a strong macroeconomic environment, anticipated rate cuts, and increased foreign capital inflows. However, a standout factor has been the significant surge in the number of retail investors, which has played a pivotal role in driving the market's stellar performance thus far.

Data show the number of registered investors with BSE has jumped over 27 per cent year-on-year (YoY) to 3.3 crore as on December 30, 2023.

A noteworthy trend emerged as the count of investors witnessed a substantial increase in states like Bihar (42 per cent YoY) and Uttar Pradesh (41 per cent YoY), underscoring the growing participation of smaller towns in the investment landscape.

The introduction of mobile-first platforms has completely changed how people trade and invest, making it much simpler. Experts point out that these platforms offer easy sign-up, quick transfers using UPI, and easy-to-use interfaces for trading. They've made it possible for all Indians to join in investing in stocks, leading to more regular people getting involved in the market.

Furthermore, the quest for supplementary sources of income alongside the widespread adoption of the work-from-home culture in the post-COVID era, allowing for more spare time to pursue personal interests, has also been a significant contributing factor to the remarkable surge in the count of retail investors.

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What does it mean for the domestic market?

The growing number of retail investors will add depth to the domestic market and will reduce the reliance on foreign investors. It will also cause increased liquidity in the markets.

Also Read: Can Indian inflation fall below 4% and economic growth remain strong in 2024? Here's what experts say

Shruti Jain, CSO at Arihant Capital is of the view that the increased participation of retail investors in India’s economic growth will have long-term benefits for both the economy and the markets.

"As more investors engage in equity, the vast amount of household savings, previously tied up primarily in physical assets, could be mobilized to propel the economy. Increased retail participation also means increased liquidity in the markets and less reliance on international funds. This will make Indian equity markets resilient to global and geopolitical uncertainties," said Jain.

"Moreover, the capital inflow in equities has the potential to fuel domestic production and boost the service sector, which in turn will contribute to the nation’s GDP and employment opportunities. A flourishing economy sets the stage for robust market performance," Jain added.

Also Read: 5 key macro themes that will influence the market in 2024

Yogesh Patil, Chief Investment Officer -Equity at LIC Mutual Fund underscored retail investors’ participation has emerged as a strong force in the domestic markets and has reduced volatility, especially in those times when foreign institutional investors decided to redeem.

"As our economy expands and income levels go up, more investors are likely to invest in equities directly and through mutual funds. It should add depth to our market," said Patil.

Also Read: Nifty 50 set to clock healthy double-digit gains in 2023; what are the key challenges for the market in 2024?

Sandeep Raina, Executive Vice President- Research at Nuvama Professional Clients Group said the number of retail investors is growing which is a welcome change happening in India.

"The increase in depth and breadth of the investors in the market would lead to more stability in the market. I think this would further increase as we are still lower than most of the developed nations and eventually, we will move more towards higher investment by the general public. As a country, we still invest more money in banks and post-office which would move towards equities," said Raina.

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Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 30 Dec 2023, 11:37 AM IST
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