India market boom resounds louder in smaller states

Telangana, Mizoram, Manipur add most investors in the past one year

The stock market boom seems to be making reverberations in smaller and non-traditional states. Indian investors from the country's hinterland, known for relatively less financial literacy, have shown higher growth in investor count in the past one year, though on a very low base.

States including Telangana, Mizoram, and Manipur have  seen between seven and 16 per cent growth in investor accounts. On the other hand, the growth in traditional business destinations such as Maharashtra, Gujarat and Delhi has been between three and four per cent.

Sector players say equity investing is gaining currency among domestic households across the country.  Continuous investor awareness programmes and rising financial literacy are helping the equity culture grow, they say. Also, use of technology has opened and expanded the geographical reach of the broking community.

“It is the result of the past few years of continuous investor education about financial markets. In hinterland India, typical investments had been in land and gold. This is changing as people are more educated about financial literacy, which is giving a push to the equity cult,” says Ashishkumar Chauhan, managing director and chief executive, BSE. He said the country lost the opportunity to inculcate equity investment during the past 25 years after 1991 reforms.

"The equity participation today is not on expected lines since reforms, despite things went more transparent as automation transformed investment experience. Probably, the client base in stock markets is less than what we had seen in early 1990s. Time has come to seize the moment as more and more people are open to equity investments," adds Chauhan.

Currently, there are 31.7 million registered investors in stock market. Maharashtra alone accounts for 7.1 million, followed by Gujarat at 4.5 million.

States like West Bengal, Uttar Pradesh, Delhi, and Tamil Nadu have a little over two million investors each.

"Several regions in India have low penetration of equity but huge potential. We are regularly doing financial literacy programmes across the country, including the north-eastern part. It's a good signal that investors from smaller states are coming ahead and investing in equity, and this trend will keep growing going forward. This is part of the financial inclusion,” says Nirmal Jain, chairman of India Infoline.

Agrees Motilal Oswal, chairman and managing director of Motilal Oswal Financial Services.

He says, "The feel-good factor is quite high and with the various reforms the current government has embarked on, I believe acceptance of equity among investors will continue to pick up. Thanks to technology and increasing distribution, more money will flow from smaller towns to equity."

Technology has played a vital role in spreading equity culture. Flourishing mobile-based applications, ease of doing trade on-the-go and various online facilities showered on customers have eased growth of number of clients.

"Today, an investor does not need to go to the broker's office to open an account. Most of the hinterland may not have any branches from market intermediaries. It's fast upgrade in technology which has enabled a customer sitting in far-flung areas in the north-east or Lakshadweep to invest directly in stocks. A lot of investors are coming online and technology has opened unlimited geographies to expand in smaller cities with great potential," says B Gopkumar, chief executive of the broking and distribution arm of Reliance Capital.