We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful. -Warren Buffett
It's been around 5 months of lockdown and now the expectations of people are drastically diminishing. The income of every other person is impacted by this pandemic. A huge number of youthful Indians are luring towards the stock market, piling up stocks for the first time just as they stay stuck at home and a large number of them are trading to boost their income amid their pay cuts and position misfortunes.
Indian millennial's, mounting on the digitization of the market and new discount brokerages offering easy to use highlights and items in play, have surged in huge numbers to invest into stocks. Financiers said 70% of the 30 lakh who opened Demat accounts over the most recent five months are millennial's.
Securities and Exchange Board of India (SEBI) information has indicated that a record 2.4 million Demat accounts were opened in the last three months which contributes 5.6% of the complete number of such accounts, increasing retail participation in securities exchanges. Within a half year, 3.9 million accounts were included, totaling 43.2 million.
Lockdown had turned the market towards bearish tread after it was announced in March 2020 and this downhill has lured investors towards trading, hoping a quick rebound in income. Others had taken trading to a daily run as some of them had lost jobs and others are dealing with pay cuts because companies are slashing costs due to pandemic. Lockdown and work from home have brought individuals a significant free time as compared to pre-pandemic times, resulting in an increased intrigue towards investing. While many of the market specialists have cautioned that the stock valuations are difficult to legitimize and there may be a bubble in the market, retail speculators appear to be assured by the concerns around COVID and its aftermath on earnings. Experts estimated that volatility in the market is around 45% since hitting lows of march to high interest.
Companies that saw the most buy by investors in June are Kotak Mahindra Bank Ltd., Bharti Airtel Ltd., Hindustan Unilever Ltd., Infosys Ltd., SBI life Insurance Company Ltd., ICICI Bank, Bajaj Finance and Bajaj FinServ. The most sold are Reliance Industries Ltd., Housing development finance cooperation Ltd., Oil and natural gas cooperation Ltd., Larsen & Toubro Ltd., Britannia Industries Ltd., and HDFC Bank Ltd.
Stock brokerage platforms also saw an increase in opening accounts by 150% in Zerodha, IIFL / India Infoline, Sharekhan, Angel Broking, etc., in which 65% are millennial's (between 24 to 40 years in age). Some of the brokerage firms such as 5paise.com leads 100% growth in opening accounts in June predominantly by the young generation (21-35 years age) which includes people from Type 2 and Type 3 cities. Similarly, the trading volume also increased in June 2020 as compared to the previous year which shows a 70% increase in trading in the same period.
The same scenario can be compared with the 2008 financial crisis where the market had crashed by more than 50% in March, plunged by 15% in October, and recovered in a year or two with a steady growth rate. Some companies had given 1000% return such as TCS, Maruti Suzuki, IndusInd Bank, Bajaj FinServ, etc. Keeping this in mind, the present generation is moving ahead to make some money by investing and as we say in the market "History repeats itself" holds again.
So, what do you think?
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