New investors flock to market amid fall

With stocks falling like ninepins, brokerages see surge in new clients looking to strike gold

A view of the BSE building in Mumbai.

The equity markets may well be witnessing their sharpest and quickest falls, but that is not deterring new investors from dabbling in stocks.

Brokerages have seen a spurt in new client additions as many investors want to buy stocks that are currently available at multi-year lows with the benchmarks having lost more than 30% from the record highs touched in January. “We have seen about 1.5 lakh new client additions this month, which is double the average monthly numbers seen in most months last year,” said Nithin Kamath, CEO, Zerodha.

“The trend is unique to this fall and the fact that people are working from home and so have more time to monitor and invest, is fuelling the trend. Having said that, if the fall continues for a longer tenure, then the opportunity might turn into pessimism,” added Mr. Kamath.

Discount broking firms, that are largely technology firms, seem to be benefiting the most as bulk of their clients are retail investors trading through the broking firm’s apps. “We are seeing about 80% higher client addition in March compared with the average monthly additions and are likely to add around 60,000 clients or more this month,” said Prakarsh Gagdani, CEO, 5Paisa, another discount broking firm.

Seizing the opportunity

“Most of the people who are opening accounts are the first timers. They are smart enough to seize this opportunity to invest when the prices are low. Young millennials are a smart lot that knows that investment in markets should be done when prices are at the bottom and not when they are at the peak,” added Mr. Gagdani. Similarly, Ravi Kumar, co-founder, Upstox, said that he was witnessing an unprecedented increase in demand for new accounts and while the brokerage saw a record addition of one lakh new accounts in December 2019, this month, it would be significantly higher.

Market volatility

“The growth is due to unprecedented levels of market volatility that we have seen recently, as well as a lot of new customers that are looking at this as the right opportunity to start investing due to attractive stock prices,” said Mr. Kumar.

smallcase Technologies, an investment platform, has also seen a 1.5-times increase in new investors in March compared with the previous month. Further, it has also witnessed a 3.5-times surge in new account leads on a month-on-month basis.