Financial advisor on a screen
Since the pandemic hit India, those who follow the financial markets have often been baffled by the huge disconnect between what is happening in the stock markets and the devastation caused by Covid-19. The only segment of the economy that has apparently picked up on the pandemic has been the stock markets. After a first setback in March 2020, when the benchmark S&P BSE Sensex hit its calendar year low of 25,639, the market is on a roll, hitting its all-time high of 53,291 points in mid -July of this year. This galloping rise has led to another phenomenon: the arrival of thousands of new investors in the stock markets, eager for information and advice on how and where to invest. Consider the numbers: Brokerage firms have seen a million new accounts receivable opened each month of the current calendar year. Between FY19 and FY20, the share of retail investors in the overall cash market turnover rose from 39% to 45%, the largest increase ever in Indian stock markets, and the share remained at 45 % during FY21 as well.
A consequence of this massive growth in the number of new investors is the rise of a group of intelligent and articulate individuals, with YouTube as the preferred medium of communication, who present to these newbies the key concepts of investing and the markets. financial. And investors are flocking to these financial influencers – commonly known as influencers – in droves. These influencers aren’t just based in big cities. Some of the most popular – with millions of followers – come from small towns and villages. Yet the ease with which they communicate with the new herd of investors has caused their income, both from Google and through partnerships with several brokerage firms that use them to reach investors, to increase rapidly. It’s a win-win solution: Investors get much-needed financial information and advice, brokerage firms reach new potential clients, and influencers make big bucks. However, these financial influencers are careful not to give stock advice and are very careful when it comes to advice. In fact, some of them are also associated with the Securities and Exchange Board of India as registered investment advisers. The central idea, they all agree, is to familiarize the new investor with the basics of financial investing and planning. In the process, they also serve the purpose of financial inclusion.
Our cover article by Ashish Rukhaiyar takes a close look at this growing phenomenon of influencers in India, how they work, why they are popular, and how they give advice to investors.
On the markets, read Anand Adhikari’s analysis of Paytm’s multiple growth drivers in the upcoming major fintech initial public offering (IPO). We’re looking at whether Paytm’s engines will pull hard enough to justify the market interest that the IPO is already generating and the challenges it may face. I am also delighted to announce that Udayan Mukherjee, well-known financial market expert and editor-in-chief of global affairs, is starting his regular column, Animal Spirits, in this issue. It’s on page 14.