India adds 5 mn investors in 1 yr, internet helps small cities put in money

India added as many investors over the past year as nearly the entire population of Singapore.

The data from the BSE, Asia’s oldest stock exchange, shows that 4.9 million investors were added over the past year. In 2018, Singapore’s population was 5.6 million.

The total number of investors tracked by the exchange rose 13.71 per cent to 41.4 million. 

The biggest additions came from Maharashtra, Gujarat and Tamil Nadu. The three states alone added 2.1 million investors. Each of the 29 states and seven Union territories added investors.

The addition of investors from 35 states and UTs was in double-digits. Telengana added 55 per cent, touching 0.5 million investors. 

Other states and UTs which showed a 25 per cent rise in investors were Manipur, Mizoram, Puducherry, and Daman and Diu. Most of them had a low base, accounting for 1.6 per of investors.

The number of investors also showed a month-on-month increase of 0.8 per cent, according to the BSE data.

A similar trend was seen in regulatory data available till May. 

The Securities and Exchange Board of India’s monthly bulletin shows the number of demat accounts. This has risen by 4 million. 

A demat account holds share certificates in the electronic form. They are held with two depositories — the National Securities Depository (NSDL) and the Central Depository Services (CDSL). 

The total number of registered investors mentioned in the BSE numbers is 41 million. This is higher than the demat accounts at the CDSL and the NSDL. Differences in the numbers are said to be on account of duplications, according to the exchange. Duplication in client codes can occur when an investor is signed on with more than one broker, according to one industry expert. 

Vinay Agrawal, chief executive officer of Angel Broking, said a big change he had noticed over the past year was the change in the geography for new customer acquisition. 

An increasing number came from smaller cities. He attributed the trend to rising internet penetration — easier availability of information helped drive more people from smaller cities into equities. 

“We’re seeing a big influx of customers,” he said. 

Established centers in states such as Maharashtra and Gujarat were also driving numbers in addition to the demand in smaller cities, said Satish Menon, executive director at Geojit Financial Services. 

Increased use of institutional investment methods might also affect the number, according to him. “These days, more new investors are coming through the mutual fund route rather than the direct equity route,” he said. 

The rise comes even as benchmark indices have risen over 10 per cent in the same year. The S&P BSE Sensex hit an all-time high of 40,312.07 in June.