India’s retail investors opened new accounts in record amounts last year, even as an exodus of foreign investors began to weigh down the multi-year rally in the country’s stocks.
While volatility has battered the US retail crowd of late, Indian market watchers including Dharmesh Mehta, chief executive of Mumbai-based DAM Capital Advisors Ltd, expect a brisk influx of local moms and pops to continue.
According to data released by the Securities and Exchange Board of India in late January, individuals opened 31 million stock-trading accounts during 2021 – more than the entire population of Australia. The momentum picked up to Rs 3 million per month in the previous quarter even as selling by overseas traders pushed the S&P BSE Sensex towards a technical correction.
Foreigners have continued to sell Indian shares since the end of September with total withdrawals of around $10 billion. The outflow comes as concerns have risen over valuations following the epic flop of an initial public offering for the local index chain and digital-payments firm Paytm at all-time highs.
“Indian markets will continue to rally, be it in terms of new listings or new account openings,” said Mehta of DAM Capital. The IPO manager expects new listings in India, which raised a record $18 billion in 2021, to attract retail investors. Because more and more individuals want to invest in stocks as an asset class.
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