“Our time has come,” said the big bull of Indian Stock market Rakesh Jhunjhunwala on India Today Conclave 2021 while sharing his views on current trends of Sensex and Nifty being all-time high considering the surge in Demat account openings 2.68 crore accounts have been opened since last year as on 2ND October 2021 as per BSE India which has increased the contribution of domestic buyers in market capital and have started to change the perception of society about trading but how come suddenly Indian citizens especially youngsters willing to step in the market?
The First reason being the government is focusing on infrastructure growth and increasing the purchasing power of citizens to stimulate the GDP to the target of 9.5% FY22 which will encourage small industries and businesses, as per reports 3.7% of Indians have a direct stake in stock exchange capital while in US 14% citizens have direct stake while 50% household has indirect stake like pension schemes, mutual funds etc. this shows the investing potential of Indian Household is yet to be unveiled. As per reports Indian households have 1 trillion dollars of savings lying in their bank accounts, after covid the RBI has reduced the Repo rate and interest rates of Fixed Deposits to compel people to spend more money and foster currency circulation.
Another reason for a sudden spike in the stock exchange can be traced back to last year’s tax reductions for corporate companies to attract more foreign direct investment as it was reduced from 30% to 22% for existing companies and just 15% for newly registered manufacturing companies now that foreign MNC`s have started to get more inclined towards India`s domestic market it will make a domino effect on Indian stock exchange too.
For all the newcomers there are endless options and different strategies which often lead to confusion and irrational decisions most of the domestic players earn small chunks at regular intervals and then put all their eggs in the wrong basket which further leads to miserable losses hence comes the scary stories of bankruptcy although times have changed now people now have access to knowledge and opinions of finance gurus. We reached some of the youngsters to know their ups and downs of the stock market.
Why Invest when you can open a savings account?
“ I`m glad you asked the most common yet most naive question of Indian Households, Of course, a Fixed Deposit is a secure option to keep the money but considering the rate of inflation let`s suppose 4-5% yearly against the interest rates of commercial banks 5.99% rate of interest that too on long term FD`s now you do the maths. I know the stock market can be tricky but you can start with mutual funds SIP`s that at least offer 10-12% return on investment yearly apart from that there are Gold bond schemes by RBI which are 100 times better than FD`s
I will simplify with an example suppose Shrey at the age of 25 wants to have a retirement fund for himself and starts investing in low-risk mutual funds which have a 10% return and he starts investing ₹50,000 monthly. Now for whatsoever reason he stops his monthly instalments at the age of 35 and now decides to circulate the retirement fund accumulated in the past 10 years and keeps investing for a 10% ROI till the age of 60. So after investing ₹60,00,000 in 35 years Shrey will retire with ₹11 crores in his bank account. COOL?”
Vinay Purohit (Retail)
How much do you think the perception of trading has changed?
“When I started hardly any of my friends was serious about it but now every third person, I know is investing but mostly in Intra Day trading as everyone wants to make quick money. I am a long term investor, there are bad days but in the long run, it's beneficial, been 6 years since I started trading.”
Anirudh Gaur (CA)
What advice would you give to newcomers?
“It`s all about patience if you are trying to invest for a long term, short term investment (trading) is indeed a gamble I have faced tragic losses in trading and don`t recommend it to newcomers, mutual funds are an easy option if you don`t want the hassle of stock price monitoring.
It is all about discipline Start with as low as ₹10000 in SIP`s with a 10% increase on investment every year for 20 years and it will yield at least 1 crore for sure”
How do know whether to subscribe for an IPO (Initial Public Offering) or not?
“When a company decides to go public from a private Ltd. Company, it has to file Draft Red Herring Prospectus (DRHP) and then Red Herring Prospectus (RHP) with market regulator SEBI. It provides detailed information about the company`s business operation. Financials, promoters and the company`s objective for raising funds by filing an IPO, IT also explains how the company aims to use the money that will be raised, the possible risks for investors etc.
The company offer its share to the public at a value decided by the company`s advisors and bankers after at least 90% of capital requested is subscribed by investors only then it gets listed on a stock exchange.”
Nishant Pareek (Student)
Stock Trading might have given two kinds of experiences but it cannot be considered a fundamental wealth drainer the experts have suggested to don`t be compelled by finance NEWS and buy trades solely based on it, the human mind has inertia it wants to be part of crowd thinking and one with the investing discipline never gets to worry in long term investments.
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