Retail investors are riding the rally of the equity market in the US and the same trend has been observed in most emerging markets like India. The investment is also in line with heavy borrowing or margin debt which may affect their holdings in the improvement.
Nitin Kamath, founder of Zerodha, tweeted, “Spike in retail activity indicates a market top? This trope keeps coming up whenever the market is down. While it makes for a great narrative, the directions of the market keep coming up.” It’s impossible to call.”
Kamath shared in an interview that most of the new users are under the age of 30, and they are trading in small amounts. Therefore, the mistakes they make will not be very costly and is probably the best way to learn as money mistakes have little impact.
Furthermore, Kamat said, in India, the system does not have as much leverage as compared to the US and hence most of the investors are buying the stock by paying the full money upfront.
“There are two ways of looking at the scenario. It is certainly a concern that many new investors are entering equities without fully understanding the markets, but on the other hand since young investors under the age of 30 have more There is no capital, so money mistakes are great lessons,” Kamath said.
Nitin Kamath further said that Zerodha had around 2 million customers in January, but the figure has increased to 8 million after the coronavirus pandemic. More than 70% of these are young investors below the age of 30.
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