There has been a growth of 37 percent in demat accounts in India in the past one year. We now have 10.6 crore demat accounts out of which — a significant proportion can be attributed to new investors from smaller towns and cities.
While talking about this increase in retail investors in India, Ujjwal Jain, Founder and CEO of WealthDesk — in an email interview with MintGenie — shares his views on a slew of topics ranging from data security to his expectations from the Budget 2023.
He tells us why he is bullish about the growth of retail investors in India. From his experience of leading WealthDesk, he says that a large number of investors are choosing to invest via curated portfolios. He is optimistic about the performance of Indian markets in this year regardless of the anticipation of recession. He is also hopeful of the Budget 2023 in which he expects more goodies in store for the financial technology (fintech) firms.
What are your views on India’s financial markets and lower participation of retail investors? Do you think platforms like WealthDesk can give an impetus to increasing the investors' participation?
India is a young nation and with the rise in skilled workforce and employment opportunities in its economy we are going to see a sizable growth in retail investors. Over the last few years, the Indian Broking industry has grown significantly. There has been a growth of 37 percent in demat accounts in India in the past one year. We now have 10.6 crore demat accounts. A large part of this growth has come from new investors from smaller towns and cities.
However, most of these investors who choose to directly invest in equities have limited access to premium research and advisory services. Often, these investors invest in stocks based on recommendations from friends and family and sometimes even based on third-party “stock tips”, which in many cases are not from professional SEBI-Registered entities.
Due to lack of guidance from professionals and limited knowledge, many face losses in the amount invested and hence stop investing in stocks. Some even start fearing it.
I am very bullish on the fact that we will see more retail investor participation in the coming years and as a platform making WealthBaskets from SEBI-licensed Professionals accessible to retail Investors on Broking will empower them to invest systematically and smartly in Direct Equities and ETFs to build wealth for the long run.
Is there any interesting trend that you noticed at WealthDesk relating to the investors' participation?
One interesting thing which I noticed is this: since the pandemic began, a lot of new participants entered Indian equity markets and most of them were DIY (Do It Yourself) investors.
Work from home regime gave them some time to follow equity markets and research them on their own but now all that is changing. As people are again getting busy with their lives, we are seeing growth in demand for our WealthBaskets which are curated by SEBI registered professionals. This saves investors all the hassle of doing research on their own and following markets regularly. It is very difficult to track and manage direct stock investing if the objective is to Invest for the long term.
There are some projections of a recession to hit the Western world with far- reaching impact in the Asian markets as well. Do you think this will have some significant impact on Indian markets and investments?
We are living in a globalized world and certainly what happens in one part of the world would to an extent affect us as well but the impact on Indian Markets might be limited to a few sectors is what I feel.
Domestic consumption of goods and services is on rise as is clearly visible from monthly GST collection data. This will certainly have a spillover effect on the overall economy and thus on Indian Markets. Something similar had happened in 2022 and despite the Russia-Ukraine war and resultant inflation Indian Markets have performed better than other markets.
What are your expectations from the Budget 2023? Do you think there are enough incentives for fintech platforms in India, or do you expect more in the near future?
All Financial services regulators including RBI, SEBI, IRDAI etc., has been proactively creating regulatory frameworks for fintech platforms to drive innovation for financial inclusion. Government has been instrumental in driving this change.
Expectation is Budget will emphasise and bring more positive commentary to accelerate innovation and support more risk capital to drive Financial Inclusion in India led by Fintechs.
With the growing popularity of fintech platforms, the concerns relating to data security have been on a rise. There have been a number of cases of online frauds, hacking and mis-selling of financial products, and even data theft. What are your views on this?
As an organization, we have always ensured that our data is secured and we follow all the data protection/security laws and regulations as set by the regulators (SEBI in our case) for our SEBI Licensed Intermediaries as a Platform enabler. The Platform is built with Information security and data localization and Privacy protection as core.