Market likely to see more retail investors from North

Vijay C Roy

Tribune News Service

Chandigarh, May 23

As the stock market surged to a record high in the early trade today, the region-based brokers and retail investors were in a celebratory mode. It not only provided them an opportunity to book profits but brokers are of the view that the market will attract more retail participation on account of clear mandate to BJP and its allies. 

Currently, less than 4% people of the northern region, comprising Chandigarh, Punjab, Haryana, Himachal Pradesh and J&K, have demat accounts and active investors are even lesser.

“In sync with the national trend, the region-based retail investors booked profit as Sensex breached the 40,000-mark. We anticipate that the stable government will boost the economy and bring more retail investors to the stock market, “said V Kumar, director, Vikson Securities (P) Ltd. 

As compared to western and southern region, the retail participation is low in the northern region mainly because of low awareness and people’s preference to other investment avenues such as real estate and gold.

According to the brokers, continuity and stability are required for actualising the GDP growth potential. With people giving a clear mandate to the NDA, they expect that the government would continue to focus on increasing private investment, generating employment across the country and reducing farmer distress which will boost the industry and in turn economy. 

The brokers are of the view that the government with full majority is best placed than ever before to address all these economic and policy-related issues.

“Stability leads to sustainability and sustainability leads to scalability. I perceive that the stable government will take steps to boost the economy and increase investors’ confidence in the market. This will definitely attract more retail investors to the stock market,” said Sarvjeet Virk, founder of Chandigarh-based Finvasia.

However, the brokers have a word of caution. The retail investors should not be in a hurry to buy at high levels in the short run. “The new investors should have a long-term vision or in other words, they should have holding capacity if they wish to buy at the current levels. They should stay invested to book profit,” said V Kumar. According to the brokers, when there is a correction in the market, investors should start to cherry-pick.

To attract retail investors, even the brokers have taken initiatives. With average trading volume at both the BSE and the NSE having increased significantly in the past three years, few of the brokerage houses have started offering free brokerage. For example, last year, Kotak Securities Ltd started free intra-day trading after Zerodha and Finvasia.

Current scenario

• Less than 4% population has demat accounts
• Active investors are even less than 4%
• People prefer real estate and gold over stocks, mutual funds

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