India's Equity Surge: Outpacing European Giants
The landscape of equity investing in India has witnessed a mesmerizing transformation over the years, spearheaded by a shift in the mindset of millions. According to Ashish Chauhan, the MD and CEO of the National Stock Exchange (NSE), this evolution reflects a fundamental change in how Indians perceive equity markets. “The rise of the equity cult in India is now undeniable,” stated Chauhan at the Business Today India’s Best CEOs event in Mumbai.
A Dramatic Increase in Market Participants
With the reach of the NSE extending to almost every corner of the country, only 28 out of over 19,300 Indian PIN codes remain uncharted. This expansion is mirrored in the staggering increase in market participants—from about a million investors in the early 1990s to over 11 crore today. “That is literally 110 times more people,” Chauhan explains, highlighting the profound impact of equity culture on the Indian populace.
Trust: The New Currency in Investing
Chauhan emphasizes the role of trust in driving this investment culture. Despite the economic theory suggesting that low per capita income countries struggle with equity markets, India’s emergence as a leader defies conventional wisdom. According to Chauhan, trust in entrepreneurs and businesses, even those unknown to investors, is India’s significant achievement on its path to market maturity.
Advancements in Technology and Regulation
Technological advancements and smart regulatory changes are key enablers of this investment revolution. In 2014, India had 1.6 crore investors, a number that grew to 2.5 crore by COVID’s onset, and has since ballooned to 11 crore. With video KYC and minimal servicing costs, investors from remote areas now have access to trading, democratizing the investment process across regions.
A Comparison to Global Markets
The trust and participation levels reflect in statistics—22-23% of Indian households now engage in equities, be it through direct investments or mutual funds. This percentage stands higher than in developed countries like France and Germany, proving that Indians hold greater trust in their entrepreneurs compared to some of their Western counterparts.
Regulatory Challenges and Market Dynamics
Addressing the dynamics of IPOs, Chauhan points out that market conditions largely dictate their frequency. “When markets are strong, IPOs flourish,” he suggests, drawing parallels between emerging and established firms, likening them to Amazon’s profitable journey. Despite regulatory challenges and evolving rules by SEBI, Chauhan remains optimistic about wealth creation fostered by equity markets in India.
As stated in Business Today, Chauhan predicts that India’s equity markets will continue to thrive, channeling savings into productive capital and creating a stabilizing force amidst global economic uncertainties.