More investors seek direct bets in stocks

MUMBAI: A new stream of retail investors with high risk appetite is flocking to equities, often taking aggressive bets on penny stocks, in search of outsized returns at a time performances of other asset classes remain subdued because of the haze of uncertainty around Covid-19.

Market watchers say that the steady decline in systematic investment plan (SIP) inflows since April is reflective of this trend, where retail investors have begun to withdraw money from mutual fund schemes to invest directly into equities.

“We are seeing a surge in new demat accounts since March this year,” said Nikhil Kamath, co-founder and chief investment officer, Zerodha, a stock trading platform. A large portion of these new investors are in their early 30s and are beginning to enter stock markets on their own and in many cases with initial investments close to ₹80,000 to begin with,” he added. “Clearly, many investors are no longer willing to let third parties manage their funds and are preferring to do it themselves.”

The number of demat accounts opened during January to May surpassed the overall client growth figures of last year, according to Zerodha. The brokerage has added over 750,000 accounts since the end of February.

According to the Securities and Exchange Board of India (Sebi), the number of new demat accounts opened in fiscal year 2020, was the most in at least a decade at 4.9 million, a 22.5% jump from the 4 million accounts opened in the previous year.

MARKET WATCHERS SAY A STEADY DECLINE IN SIP INFLOWS SINCE APRIL REFLECTS THIS TREND