5 reasons why people are flocking to the stock markets
Brokerages are recently compelled to witness a boom of sorts when it arrives to opening of new investor accounts.
More than 4 million new accounts, in the past four months, have been opened, taking the total to 44.3 million.
In spite of the economic slowdown, widespread job losses, and salary cuts, what is the reason that is driving people to the stock markets?
Ease of account opening and zero charges
The days are long gone when opening a trading and dematerialised account used to take 70 signatures.
An investor, now, can open an account sitting at their home, all thanks to eKYC with online brokerages.
A very casual and simple Google search leads to a slew of brokerages vying for your attention with loads of freebies and offers, as like zero-broking fees and no account opening charges.
Some even vow to allow you for initiating trading in five minutes.
Moreover, as the air rolls information, new account openings have been underpinned by a sharp rally in the stock markets.
Also, the benchmark Sensex and the Nifty have rebounded more than 40 per cent, from March lows.
Several stocks in the broader markets are doubling in a matter of weeks.
After the March sell-off, the market direction, the March sell-off henceforth, has largely been upwards, thanks to the outrageous stimulus measures taken by global central banks, especially the US Federal Reserve.
This apparently means, a majority of people who entered the market after March, may have counted some handsome profits
And this has resulted in having them prompted for investing more and nudge others to open trading accounts as well.
Improved mobile apps
If we talk about today's scenario, fast internet and smartphones have become ubiquitous.
Brokerages have been fast to tap this opportunity.
Also, shortly, mobile trading apps have become user-friendly and intuitive. Moreover, new-age apps have paved a way to the gamification of stock-market trading. Currently, it has become an in-thing for investors to post snapshots of the mark-to-market gains they make on their investments. Many apps show real-time gains one makes.
This gives most of the individuals the right amount of adrenaline rush to elevate the wager, without necessarily giving much importance to stock fundamentals. Specialists state that people across age groups who are equipped to use a smartphone are being drawn to trading.
Work from home
Also, as the headlines columns itself, the often-cited reason for the traction in new account openings is the ‘work from home’ phenomenon.
Staying back at home has given people extra free time, which many are using to trade with an intention to make fast bucks.
And moreover, this is reflecting in the numbers as well. The share of non-institutional investors, in July, in trading volumes surged to 72 per cent - the highest in more than a decade.
Specialists say this data point suggests small investors are actively trading.
Access to stock tips
Nonetheless, this is potentially one most risky element but a driver simultaneously.
Currently, WhatsApp, Telegram, etc are flooded with groups that dole out investment tips.
Also, because joining many of these groups is free, thus, the young generation is seen seeking advice from this medium.
“When you have an active trading account, all you need is actionable tips, which groups on Telegram provide.
"Also, as the market has been buzzing, most tips are generating returns. The bubble is intact, but is only getting larger,” mentions a market expert.