“I USED TO TRADE in options in India but after incurring losses I started trading through forex trading apps. Now that they are banned, I am focusing on the stock market again,” says 22-year-old Ashish Sidhuja from Nagpur, who opened his demat account in 2021.

“I invest in green energy companies because that is where the future is,” says Nandini Chakraborty, a 19-year-old Economics student from Kolkata.

Meanwhile, 23-year-old Pune-based Vandit Dharamshi, who was handed his demat account on his 19th birthday, has taken up investing as a career after graduation. “Stock market fascinated me even before I completed my matriculation,” says Vandit.

The tribe of India’s millennial stock market investors is mature about their aspirations, intrigued about making money, thrilled about their investments, and yet calculative about risks. Wealth creation features high on the aspirations of millennials, who are eying the stock market as the surest route to fuel their ambitions.

A Gamified Ecosystem

From 4.5 crore in March 2019, the number of retail investors in India jumped to 12.7 crore as on August 31, 2023. Around 3.1 million new demat accounts were opened in August — the highest since January 2022. Dissect this singularity, and one would find Young India at the heart of it.

The world of finance, stocks, and currencies has never been as enticing as it is today, when web series, including Scam and Billions, and movies such as Big Bull and The Wolf of Wall Street, have made it to mainstream entertainment. Popular entertainment coupled with the marketing communications of broking firms, specifically aimed at attracting buyers, give young minds the first glimpse of the thrill and wealth potential of the stock market.

Apart from the risk-reward related thrills, playing the stock market also implies gaining real-life skills, an honest avenue to earn money, and social rewards of being recognised as diligent. With the mobile device being inseparable from millennials, any parent would prefer their kids to learn financial skills through stock investments on the cellphone than mindlessly binging on entertainment content.

The stock market also allows investors to pick and choose from multiple instruments of trading along with the option to indulge in Do It Yourself (DIY) or pick services managed by experts. The fine balance of providing autonomy and guidance when required is a feature that appeals to youngsters who want to learn the art and science of investments while exercising caution.

Retail Participation

According to the NSE Market Pulse, the aggregate turnover in the NSE cash market hit an all-time high of ₹16.8 lakh crore in August. In the same month, the average daily turnover (ADT) in the cash market segment also touched a 22-month high of ₹76,500 crore. ADT in the equity derivatives segment in the first five months of FY24 stood at a record ₹1.7 lakh crore, surpassing its previous high of ₹1.6 lakh crore in FY22.

The euphoria of trading among the retail class can be gauged from their positions in the derivatives segment. In equity derivatives, retail investors continued to be net buyers in equity future & options (F&O) contracts, compared to institutional investment. In CY2023, retail investors bought F&O position worth ₹52,300 crore. But, during the same period, both foreign institutional investors and domestic institutional investors were net sellers in the derivatives segment, exiting F&O contracts worth ₹31,900 crore.

Retail participation in the Indian stock markets resulted in a significant surge in retail investments in FY21 and FY22. Net retail investments touched ₹2.3 lakh crore during both fiscals. However, the trend moderated in FY23 and FY24, with net retail investments dropping to ₹49,200 crore in FY23 and an outflow of ₹7,000 crore in FY24 (till August 31, 2023).

Stocks & Youth

Sidhuja says he opened his demat account in June 2021 after chancing upon stock trading-related YouTube channels while content-snacking during lockdown. He also admits that the web series, Scam, enticed him even more to explore the stock market.

Sidhuja started trading while he was pursuing his BBA degree and has continued ever since. Although working for his family business of wholesale vegetables earns him a decent amount every month, he uses the stock market to generate secondary income.

At the onset, Sidhuja incurred frequent losses in options trading, but that did not deter him from dabbling in stocks in general. He changed strategy and started forex trading through brokerage firm EXNESS, and used the MT4 online platform to execute his trades. Now that EXNESS is banned in India and is under investigation by the Directorate of Enforcement (ED), Sidhuja has started focusing on delivery buying in the Indian market again. His strategy is to sell after getting a return of 12-15% on every stock. He claims to have made a profit of ₹3 lakh since June 2021 from stock investment, sufficient enough to pay his last year’s BBA fees.

When asked about his investment strategies and matrices of evaluating a company, Sidhuja admits he has little knowledge of fundamentals but understands technical charts and only invests in companies that have promising future plans.

Nandini, on the other hand, was given a small corpus after she turned 18. Rather than opening a traditional fixed deposit account she decided to invest in equities. “Fashion accessories and clothing have gone up by more than 20% within a year and an FD would yield me less than 7% in a year. For me, FD does not even qualify as an investment,” says Nandini. Climate change and green energy resonates with her as potential investment themes since they match her personal ideology and make sense as futuristic trends. “I invest in ETFs that represent a basket of green energy companies. But I have also invested in some companies that yield high dividends,” explains Nandini.

She admits having consciously stayed away from downloading a mobile app for trading. “It is tempting to keep looking at information and then buy stocks just because the trends look enticing, but I would rather take my time to do research and then buy by logging into my account using my laptop, and exit immediately.” She prefers to stays away from finfluencers because she does not trust the self-proclaimed gurus who run get-rich-quick schemes.

Vandit, meanwhile, says his passion for stock market started when his father invested, on his behalf, ₹2 lakh that Vandit received as gift money from various relations till the age of 11. The demat account was handed over to him on his 19th birthday and he was surprised to see the amount to which the initial investment had grown. “I decided that investment shall not only be my life-long passion but also my vocation,” he says.

After finishing his BBA, Vandit is now working for a family owned investment fund in Pune. Meanwhile, his corpus in the equity market has grown more than 15x in the last 12 years.

He believes in long-term investment but admits most of his generation gets into the stock market because they are lured by the easy-money and grand-lifestyle schemes projected by finfluencers. “Most of them do not understand that building wealth through the stock market is a long-term game and they approach trading like gambling.”

“Zero brokerage and easy to use apps are addictive for young people and they keep winning and losing small amounts and dream of making it big like the finfluencers they follow,” says Vandit.

For investing from an early age, when the kitty is small, the preference of the youth is clearly biased towards the stock market because of the higher rate of return. Their risk appetite is generally not blunted by fears of losing their savings, or being unable to provide for EMIs or household expenses.

Akin To Mobile Gaming

Unlike predecessors, this generation grew up watching the world through their mobile screens. For the millennial cohort, the stock market is a real-life game that can be played on mobile devices. In a few clicks one can create a demat account, link it to a trading app and start playing.

The rise of young retail investors is a global phenomenon. Social media platforms are abuzz with young investors engaging with each other on fundamental and technical aspects of stock investing. YouTube channels of finfluencers attract young minds, like MTV or ESPN in the 90s. They flaunt their lavish lifestyle and brag about their wealth in carefully curated social media posts to add the bling factor to the world of stock trading. Additionally, discount-free brokerages such as Zerodha and Robinhood in the U.S. have brought forth innovations that are classic to online shopping sites, but have never been imagined for the investment sector.

Whereas other factors may be responsible for enhancing the attractiveness of the stock market, the key to increased retail participation is the ease of access, and smoothness of transactions.

The app economy has made investing in the stock market as easy as online ticket booking. Internet of Things has paved the way for the youth to learn and invest in the market without formal education. Mobile apps, including Zerodha, Groww, Upstox, etc., not only offer the ease of making money from the comfort of one’s couch but also provide easy access to understand data through lucid charts, graphs, articles and blogs. Practical deals such as ‘discount brokerages’ and other user benefits are cherry on top for the youth who are already accustomed to getting deals, discounts and loyalty points on e-commerce sites.

The growing tribe of millennial stock market enthusiasts is both the cause and effect of peer influence. This cascading phenomenon is likely to bring forth even more millennials into the share market, resulting in even bigger retail participation.

Professor Dwarika Prasad Uniyal, pro-vice chancellor of RV University, Bengaluru has been interacting with generations of youth for more than two decades. “The tsunami of young retail investors into the Indian market could be attributed to the ecosystem that has now made it easy to dabble in stocks,” says Uniyal.

He points out that every student has a bank account that gets them a demat account free of cost. A big factor is also the mindset of today’s youth. “Youngsters want quick bucks and are not risk-averse. They see social media stories of easy money to be made from the stock market, projected by finfluencers, and in their youthful confidence, they, too, take the plunge,” he adds.

Lure Of The Stock Market

The Twenty somethings grew up on stories about the stock market-led rise of Dhirubhai Ambani, the crazy success of Rakesh Jhunjhunwala and the white-collared crimes of Harshad Mehta and Ketan Parekh. The parallel world inhabited by Warren Buffett or Charlie Munger is not alien to them.

Professor Uniyal says during the lockdown, most people started either moonlighting or stock trading.

“Nowadays, it is so easy to play with the stock market because of the trading apps. Finfluencers project a rosy picture of the stock market since they also want to make money by selling their courses, or get money from advertisers, or YouTube views,” he adds.

The Risk Caveat

“Stock market investments are subject to market risks, invest with caution” is probably the most ignored caveat for those seeking financial adventures.

The youth is inherently impulsive and bold in nature because most of them are yet to experience the harsh realities of adult life. At this age their sensitive nature makes them more prone to mental health issues such as depression or suicidal thoughts.

A study on the correlation between the South Korean stock market crash of October 2008 and suicide cases in the country in November 2008 showed a 40% increase in suicides committed by males aged between 30-60 years. In case of females aged 30-40 years and 40-50 years, the increase was 101.84% and 74.81%, respectively.

According to a research paper published by The Open University, Faculty of Business and Law, U.K., on the indices of 36 countries and the number of suicide cases, market movements have a clear and recognisable effect on percentage change in suicide rates. The research indicated that suicide rates increase with decline in the market.

Millennials have entered a buoyant market that seldom moved downwards since the pandemic. Shallow knowledge about companies and weak understanding of fundamentals coming together with youthful enthusiasm mostly spell disaster for investors. While the digital era has made it easy for the youth to enter the market, finfluencers, crafty information and advertorials have infested the playing field with potential landmines that young investors need to carefully navigate to survive the game.

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