Zerodha, Upstox and other broking apps are minting money as FOMO and easier access drive Indians to stock markets

• Indians are heavily investing in financial assets and bulk of that money is routed via startups like Zerodha, Upstox and others.
• In the last two decades, financial assets per adult in India gained 2%, while non-financial assets fell 8.4%, as per a Global Wealth Report 2021 by Credit Suisse.
• Tech savvy broking firms like Zerodha, Upstox hold double digit market share in terms of number of unique investors as compared to traditional stock brokers like Motilal Oswal, Angel Broking.

Financial assets in India have been on an uptrend in at least the last two decades as financial assets per adult in India have gained 2% between 2000 to 2020, while non-financial assets fell 8.4%, shows Global Wealth Report by Credit Suisse.

The data indicates rising interest of individuals in financial assets like stocks, bonds, mutual funds.

Adding to it, data from the Reserve Bank of India (RBI) shows that in the year ended March 2020, the net financial assets in India — defined as gross financial assets less financial liabilities — jumped from ₹13.73 lakh crore in FY19 to ₹15.62 lakh crore in FY20 due to decline in borrowing from banks.

Since interest rates have remained low in the country for quite some time, investors have shifted more savings towards soaring markets.

Many new retail investors entered the industry in the last one year as interest rates kept depleting and markets kept surging. In fact, 14.2 million demat accounts have been opened in FY21, according to SEBI data.

“The net financial assets of Indian households have grown due to fall in bank deposits and increase in investments. Lower interest rate environment, combined with friction-less access to financial markets due to fintech services and online brokers, is one of the key reasons for this spike in financial assets in India. As of January, India's total demat account stood at 51.5 million, a 26% increase compared to the end of FY20,” said Nikhil Kamath, cofounder of Zerodha.

Most new investors that have come in the last one year are lured because of the record high Sensex/Nifty 50 levels and ease in opening a demat account, doing e-KYC through popular online trading platforms like Zerodha.

Zerodha holds 18.85% market share with 33.9 lakh unique active investors followed by Upstox with 10.9% market share with19.6 lakh unique active investors, reveals data by stock market analytics platform Trade Brains.

These online trading platforms hold greater market share over traditional broking firms like Angel Broking, ICICI Securities and Motilal Oswal Services.

(As per data from Trade Brains as of March 2021)

Indian household’s cash and savings have been deployed into the market because of ease in online investment procedures like e-KYC, payment gateways, access to relevant information on fingertips and FOMO (fear of missing out) effects, highlights Neelabh Sanyal, chief operating officer and cofounder of Kuvera.

“Minimum investment options by banks and mutual funds, subdued returns on non-financial assets such as real estate and availability of surplus cash due to pandemic have attracted investors to financial markets. Besides, the investor is also evolving and naturally gravitating to financial assets due to higher transparency, standardisation, liquidity and strong regulatory environment as compared to non-financial assets,” said Sanyal.

Ravi Kumar, founder and chief executive of Upstox feels that financial assets will continue to grow in the coming time as investors have learned the importance of investing.

"Indians are increasingly preferring financial assets over physical assets. While non-financial assets give a sense of ownership, financial instruments such as mutual funds and equities are easy to liquidate. Also, due to the pandemic people have learnt the importance of investing, portfolio diversification, and hence financial assets will continue to grow in the future," said Kumar.

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