Smaller investors, women and youth remain away from the stock market. But companies ’initial public offering (IPO) has completely changed this perception. Huge earnings from IPOs in the short term have attracted much interest in this segment. This is due to the opening of more than 1.4 crore demat accounts in the last financial year, which is almost three times higher. The share of women in the new Demat account is more than 70 per cent. In the coming time, IPOs of good companies, including LIC and PayTM, are coming up. In such a situation, it is believed that the trend of small investors will increase further. It is expected to open more than 10 crore new Demat accounts in 2-3 years.
What is a Demat Account?
An account opened for investing in a stock market is called a demat account. It includes details of investment along with profit and loss. If you want to buy shares or mutual funds (equity funds) related to equity in the stock market, it is necessary to have a demat account. Moreover, gold mutual funds and gold exchange traded funds (ETFs) must have a demat.
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Increase the share of women investors
Most of the new investors who join the stock market are millennials and women. According to statistics, 77 percent of women open a demat account in 2020-21 compared to fiscal year 2019. At the same time, there is a 66 per cent increase in the number of women opening demat accounts in 2019-20 compared to the financial year 2018-19.
Keep an eye on the IPO, not the shares
Anuj Gupta, Vice President (Currency & Commodity), IIFFL, says that Demat accounts are currently open to investors. He says that the IPOs that have come in the last one year have yielded huge returns. For example, on Monday, shares of GR Infra and Clean Science were listed at 100 percent higher. In such a situation, the investors who received the IPO would get 100 per cent return in a day. He says most of the new investors will use the proceeds to another IPO. According to data, there are currently 65 million demat accounts, the number of which is expected to increase to 120 million next year.
Youth participation is increasing
After applying for the IPO, not everyone gets it, but it is distributed as lotteries, which are done through AI, says Gupta. In such a situation, the emphasis is now on opening a demat account for everyone over the age of 18 in the family. This increases your chances of getting an IPO. This has led to an increase in youth participation in IPOs.
The attractiveness of low income people has increased
Buying stocks from the market and waiting long to make a profit is usually not a big attraction for low-income small investors, but IPOs have turned the dice. Gupta says that by investing less in an IPO, with larger earnings, smaller investors with lower incomes are now more involved with the market.
One Click Demat Account
Experts say market regulator SEBI has made demat-related rules very easy in the past few years, under which you can open an account in the comfort of your home. The simplification of the KYC process, the ease of doing business through mobile apps and the expansion of the Internet have made it easier for new investors to connect with the market.