“The key to making money in stocks is not to get scared out of them.”
– Peter Lynch
The stock market, or some call it a share market, was never as popular in India as it has gained in the last two years. March 2020 was the month where it all began. An ideal sitting position is one of the frustrating positions where you have no work or task to perform. That happened with many, as the jobs were on hold or the remote working was in progress and many college students were having no lectures for weeks that triggered their interest in something useful.
What does Covid19 do?
India’s share market was at the downfall in the same period. BSE Sensex saw one of the worst single-day crashes, losing 1,448 points, that took place in February 2020. Later it got worse on March 23, recording its biggest fall of 3,935 points, closing at 25,981.24 after the central government announced nationwide lockdown. NSE Nifty took a dip of 1,135.20 points, closing at 7,610.25. At that moment, no one was sure about how the situation was going to be in the next couple of months.
China’s bio-weapon Covid19 virus took Sensex on freefall which exceeded the daily limit; and an automatic mechanism got activated to curb the freefall. Index operations paused for 45 minutes as it plunged 10 percent.
The panic situation was all around with no clear idea of, what will be the next step to restart the operations. The government and entrepreneurs were in a situation where they were preparing for the new financial year. This unprecedented event shattered the planning of many as the companies were closed for an undisclosed date. Still, the stock market was running.
When does the recovery begin?
Nifty was slowly recovering from the downfall at the beginning of April 2020. In the first week of April, it was at the level of 8,700 and was ready to take rally for the long run, as the government was preparing a budget that could help the market to restart its operations.
Nifty displayed an upward trend at the beginning of June 2020. It was happening due to the reopening of the market as per the covid guidelines issued by the central government.
Sensex recovered 484 points on 23rd April 2020, closing at 31, 863. Meanwhile, Nifty closed at 9,313.90, up by 127 points on the same date.
Fintech startups contribution
Fintech startups that were dealing in services related to the stock market went high on demand. Zerodha, Upstox, Groww, and SAMCO are some of the largest stockbroking startups that have registered millions of retail traders in just two years of span.
As per the data available in the market, 10.5 million new Demat accounts were opened in 2020 and the number rose to 27.4 million till November 2021.
Contribution of retail traders & investors
According to news and a study report by NSE reveals that retail investors are dominating India’s stock market since the first covid 19 wave.
There was a time when retail traders were called net sellers of stocks. Now they play a prominent role in the stock market. In the last two years, FIIs have reduced their investments; still, the market is booming. All the credit goes to domestic retail traders who turned into retail investors by holding major stocks for the long term.
Retail investors are making it difficult for professional investors as they have showcased their skills & knowledge of investment by diversifying their portfolio.
The stock market offers a variety of investment opportunities out of which investors, especially new investors, are turning heads towards equity investment and mutual funds in large quantities.
Mutual funds are among the top picks of new buyers as it poses less risk compared to equity trading. Even mutual funds have different index funds that offer investments according to your preferences, like tax savings or hybrid funds.
It is definitely growing at a rapid pace, and everyone is expecting to dive into this growth race to increase their income. However, being bullish is not enough to make money in the market. Taking advice from experts or having proper knowledge can only help you in the long run.
– Parag Ahire