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India’s millennials are driving a surge in stock trading

01/10 2020 15:30

India’s youth population is driving a boon in the country’s investment landscape as millions have been piling into stock trading during the pandemic. 

Mirroring trends seen in the U.S. and other major economies, millennials in India have been buying up stocks at a steady clip as pay losses, economic woes and increased time at home have spurred the hunt for new income streams.

In the six months since India imposed its first wave of coronavirus lockdowns, CDSL (Central Depositories Services India Ltd) — one of the country’s leading securities depositories — saw a near 20% rise in new accounts (known locally as demats), hitting more than 25 million overall last month.

Of the country’s new accounts, the vast majority were opened by millennials aged 24 to 39, according to separate data from markets regulator, the Securities and Exchange Board of India.

The uptick points to young people’s efforts to shore up their finances as the pandemic weighs on economic growth and interest rates in the country of 1.3 billion, Ganesh Vasudevan, research director at IDC Financial Insights Asia/Pacific told CNBC Make It. “The pandemic and lack of competing asset classes have accelerated the shift to the equity market.”

And it’s not just traditional trading services experiencing a boon. 

India’s various and growing online investment platforms have also seen a surge in demand, particularly among younger, less experienced investors, as they lower entry fees and ease access to overseas markets.

Online trading platform Zerodha — India’s largest brokerage by client numbers — now claims to handle more daily transactions than the U.S.’s most popular platforms, at 5 million to 7 million orders per day versus Robinhood’s reported 4.3 million. Meanwhile, Stockal, a platform that helps Indian investors buy U.S. stocks, saw a 50% jump in millennial investors from April to September as transactions surged 300% to $160 million.

“The ease of opening (a) trading account, seamless mobile platforms and above all availability of cheap internet is further encouraging retail investors to dabble into stock trading,” said Vasudevan.