Over 70% of 2m new customers first-time investors: Upstox

MUMBAI: Discount brokerage Upstox, backed by Ratan Tata and Tiger Global, says more than 70 per cent of its over 2 million new customers are first-time investors and under-36 — something even traditional brokerages also back given the massive over 20 million new investors coming in the market during the pandemic year.

According to the data from the National Securities Depository, and Central Depository Services, a record 14.2 million new demat accounts were opened in FY21, a near three-fold rise from the previous year’s 4.9 million.

The massive 68 per cent market rally after the meltdown in the first half of 2020 has seen a massive influx of investors into the equity markets during the year when the whole country was under lockdown for long.

While limited spending options left more money in the hands of people, a major spike in gold prices and a dip in property prices forced many to opt for equities to park their funds.

This was visible from the record foreign investments into the market — USD 35 billion in FY21 and foreigners own close to a quarter of the market today valued at over USD 593 billion.

“Our customer on-boarding surged over three-times in FY21, adding more than 2 million customers, taking our customer base to over 4 million. Of this, over 80 per cent are in the 18-36 age bracket, and over 70 per cent of the new customers are first-time investors,” Ravi Kumar, co-founder and chief executive of Upstox, told PTI.

On the regional profile of customers, he said of the total customers of over 4 million around 40 per cent of them are from Maharashtra, Telangana and Andhra, which are traditionally high investor base states, along with Gujarat.

Recently the BSE said of the 70 million users on its platform, close to 15 million are from Maharashtra alone, followed by Gujarat with 8.6 million; UP (5.2 million), Tamil Nadu (4.23 million) and Karnataka with 4.22 million investors.

As of June 7, there were more than 70 million investor accounts on the BSE alone, which was only 40 million in end March 2020. This means brokerages/exchanges on average added 1.2-1.5 million new investors every month in the year.

Kumar said more than 80 per cent of its customers are from tier 2 &3 cities– traditional brokerage Angel Broking also has similar percentage of customers coming in from small towns and so are the age profile too, as vast majority of them are being under 30.

“We’ve seen maximum first-time investors coming in from tier 2 cities like Jaipur, Aurangabad and Warangal. Among tier 3 cities, Karimnagar, Rangareddy and Ahmednagar are leading the race,” Kumar said.

“We want to be the partner of choice for the new generation of traders and investors. We also want to take the financial investment story further by reaching out to the remotest parts of the country, Kumar explained his philosophy. We want to foster a culture of investing, where one does not look at investing as a chore but finds it easy and engaging through a tech-enabled, intuitive platform,” he said.

On why investors are flocking to the equity markets through the digital mode, he said, the pandemic forced many to explore new sources of income.

The digital flourish that the country is known for has significantly boosted digital-based trading and investing and no wonder tech-savvy millenial who have a higher risk appetite than the previous generations, realised that getting started in the stock market is easy in this digital era, Kumar said.

He also said the proliferation of smartphones and low-cost data were other boosters propelling stock trading. From a regulatory side eKYC and Aadhaar eSign have also made demat account opening process paperless and easy, enabling equity participation to expand at a faster pace.

During FY21, the Sensex zoomed a massive 20,040.66 points or 68 per cent, while the Nifty skyrocketed 6,092.95 points or 70.86 per cent despite the pandemic blues. This was considerable as it came a negative return of 30 per cent in FY20.

FY21 rally was best after the FY09 rally when it skyrocketed 80 per cent after tanking 40 per cent following the global financial crisis that began in September 2007.

The massive rally in the market was driven by record foreign investments into the equities in the fiscal.

Prior to April’s outflow, FPIs had been infusing money in equities since October–pumping in over Rs 1.97 lakh crore between October 2020 and March 2021, of which Rs 55,741 crore were in the first three months of this year.

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