For the last couple of days, one data metric related to the stock market is being widely shared on social media – the total number of demat accounts in the country crossed the 10-crore mark for the first time ever.
Even finance minister Nirmala Sitharaman mentioned it on Twitter while further highlighting that Tier 2/3 towns accounted for a large part of the growth in the number of demat accounts over the last two years.
While it may be true, the fact remains that even as investors are coming to the markets from across the length and breadth of the country, bulk of the actual trading in the Indian stock market — nearly 80 per cent — is coming from only two cities – Mumbai and Ahmedabad.
Data from the Securities and Exchange Board of India (SEBI) shows that in the current financial year till July, Mumbai and Ahmedabad accounted for 67.8 per cent and 11.4 per cent, respectively, of the total cash market turnover on the National Stock Exchange (NSE).
This assumes significance as there’s hardly any other city that has a notable contribution to the exchange’s market turnover.
On BSE, these two cities accounted for nearly 58 per cent of the cash market turnover in the same period. Mumbai corners a majority share as most institutional investors – foreign portfolio investors, insurance majors, financial institutions, banks etc – are based in the financial capital city.
Even metropolitan cities like Delhi (4.6 per cent), Chennai (5.1 per cent) and Kolkata (0.9 per cent) along with information technology or software hubs like Bengaluru (0.7 per cent) and Hyderabad (2.4 per cent) have a miniscule share in the cash segment turnover of the Indian stock market.
Interestingly, the last couple of years have seen an influx of young investors, mostly millennials, who have come to the public markets through discount broking majors like Zerodha, Upstox, Groww and 5Paisa, among other platforms.
It also coincided with the period when financial influencers gained immense popularity through their YouTube channels with some of the well-known ones like Pranjal Kamra and Rachana Ranade boasting of millions of followers that even dwarf the following of leading broking firms.