The key, they say, is in not spending time, but in investing it. With the pandemic-induced lockdown and the resultant work from home (WFH) offering plenty of time, many people have found a way to not just invest their time but also reap some dividends.
From full-service brokers to new-age discount broking start-ups, stock trading players are witnessing a substantial jump in trading activities as well as interest in opening new accounts ever since the first phase of the nationwide lockdown.
For instance, Mumbai-based discount broking firm SAMCO Securities saw its monthly account opening volumes jump as much as 120 per cent compared to pre-Covid-19 levels. Its year-on-year trading volumes for the month of May also went up by 130 per cent.
Market volatility
Jimeet Modi, founder and CEO of SAMCO Securities, said the surge in trading activity is on account of two broad reasons. “First, a lot of people missed out the post-demonetisation market rally, when the markets went up from the 8,000-level to touch 12,400 points. So now, they don’t want to miss out on investing during the Covid-19 fall.”
“Second, now there are no more incentives to keep money in FDs or savings accounts, since interest rates on deposits have gone down substantially,” he added.
Stock markets have been volatile ever since the pandemic broke out. The Nifty index, for instance, went down to about 7,500 points in April before touching 10,000 in June.
“Markets are still lower by 25-30 per cent from the earlier highs and the ‘fear of missing out’ is at play,” Modi added.
Sharekhan, one of India’s leading players in the full-service broking space, also saw its average daily trades go up by 28 per cent as compared to the pre-Covid levels in January and February.
“The market volatility triggered by Covid-19 has had a definitive impact on participation in the capital markets. New client acquisition in May 2020 was up 25 per cent compared to the calendar year 2019 average,” Jaideep Arora, CEO, Sharekhan said.
Sharekhan, a subsidiary of BNP Paribas, also announced its foray into the discount broking business earlier this month and launched a beta-version trading platform called ‘Project Leapp’.
“This surge in customers has been distributed across full service brokers as well as the new discount brokers,” Arora said, adding: “This was proof that there is a customer requirement for both the broking models, which is why Sharekhan took the decision to enter the discount broking segment while also renewing its focus on its original full-service model.”
Easy account opening
Many players in the broking industry also attribute the spike in new accounts to the efforts of the regulator (SEBI) and other market participants, who have made the end-to-end account opening process seamless and entirely digital.
“Most players from the stock broking industry moved swiftly in adapting and evolving processes during lockdown/WFH forced on account of Covid-19. Major activities like client on-boarding and trading were already seamless and evolved, except a requirement to get a wet signature on a POA which has now been done away with the new E-DIS,” Gurpreet Sidana, COO of Religare Broking, said.
He added: “One good thing that happened is that SEBI, exchanges and depositories have come up very quickly in terms of dispensations and providing alternate digital options for some activities.”
Religare Broking’s monthly new account openings have gone up by as high as 80 per cent, particularly after the lockdown.
“With the lockdown and early corrections (in market), prices turned reasonable for most good quality stocks. We are also seeing a lot of interest from investors who had stopped trading in the last five to seven years,” Sidana added.
FYERS, a Bengaluru-based technology-focussed discount broking company with more than 50,000 clients, also said it has seen a huge surge in interest in opening demat accounts over the last three months.
“March and April have been the best months for us since our inception. In percentage terms, our account opening in March and April was 40 per cent higher than in February, and that was an unprecedented kind of increase in the number of accounts,” said Tejas Khoday, Co-founder and CEO of FYERS.
“We can attribute it to the fact that people are at home and markets are open while everything else around them is shut. So, the only avenue or opportunity to make money is through stock markets,” Khoday added.
He also added that the upward movement of the market in the last two months would have improved the confidence of the new entrants, and such sentiments will help increase market participation.