Smaller states see healthy growth in equity investor base

Mizoram, Manipur, Bihar, Nagaland, Arunachal and Telangana have all seen double-digit growth

Direct equity investing is making inroads into smaller towns and cities. The number of registered investors with stock exchanges has risen eight per cent in the past year.

Several smaller states have managed to outpace the overall growth rate. And, a majority of the high-growth states are non-traditional markets, with relatively poor financial literacy.

Mizoram, Manipur, Bihar, Nagaland, Arunachal Pradesh and Telangana have all seen double-digit growth in the number of stock investors. Telangana, because of the presence of metro city Hyderabad, has emerged as the fastest growing state, with an increase of 37 per cent in the number of investors. Mizoram and Manipur recorded 21.7 per cent and 17.3 per cent growth, respectively.

The traditional markets for stock investments, of Gujarat, Maharashtra, Karnataka and Delhi, grew between six and nine per cent. This is largely attributed to their already existing, large, investor base.

Those in the sector say the growth from the hinterland is mainly on account of rising investor education programmes and technology breaking the geographical barrier. They predict equity investing will gain further momentum among households, as other asset classes continue to disappoint.

"In hinterland India, the typical investments had been in land and gold. This is changing, as people are more financially educated, which is giving a push to the equity cult," says a stock market participant, who could not be named due to regulatory norms.
 

Apart from investor awareness programmes, use of technology has opened and expanded the broking community's reach. Investors in remote areas can also access the stock markets with ease.

In the past year, India added nearly 2.4 million investors at the exchanges. There are now 33.1 million registered. Maharashtra has nearly 7.5 mn, followed by Gujarat at 4.7 mn. Karnataka and Delhi have about two mn investors, each.

Nirmal Jain, chairman of Indian Infoline, had earlier told this newspaper, "Several regions in India have low penetration of equity but huge potential. We are regularly doing financial literacy programmes across the country. It's a good signal that investors from smaller states are coming ahead and investing in equity; this trend will keep growing. This is part of financial inclusion."

Motilal Oswal, chairman, Motilal Oswal Financial Services, says: "Acceptance of equity among investors will continue to pick up. Thanks to technology and increasing distribution, more money will flow from smaller towns."

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