A new breed of number crunchers and aspiring equity players in Covid times

Housewives, retired persons and even students are making a beeline for courses in this space as they seek to earn additional revenue, or even make investing a career

A seasoned investor talks about the time a friend gifted him a set of ten stocks worth Rs 2,000 when his son was born. The father says while the value of all other gifts has depreciated, this one has grown substantially- the son has turned ten and the stocks have grown 100 times over in value to about Rs 2 lakh. 

Who said money doesn't grow on trees? If you plant the seeds to wealth now, they could turn into money (yielding) 'trees' later.

Investing in stocks has become a major point of interest during Covid times. Many edtech companies have reported a surge in financial and stock market-related courses.

Says Raghav Gupta, Managing Director, India and APAC, Coursera: “Since March, we have seen a 966 per cent increase in enrolments for finance courses from the same period last year. We are continuously working with the world's best institutions and companies to create high quality, relevant content, enabling learners to build necessary skills for current and future jobs." 

Gupta believes technology is the core business driver. He says, “The financial services industry has been at the forefront of adopting technology and is projected to become a mass adopter of AI over the next two years. With tech integration in current job profiles and changing business scenarios, continuous upskilling has become imperative for both, finance professionals and beginners.”

Some basics on the stock market 

Stocks, also known as equities, represent fractional ownership in a company, and a stock market is a place where investors can buy and sell the ownership of investible assets. Why is a stock market integral to a country? An efficiently functioning stock market is considered critical to economic development, as it allows companies to quickly access capital from the public and expand business. By offering stock shares instead of borrowing the capital needed for expansion, the company avoids incurring debt and paying interest charges on it. The secondary purpose of the stock market is to give investors the opportunity to share in the profits of publicly-traded companies. Investors can profit from stock buying in two ways. One is through regular dividends that the company pays out of the profit it earns. This is usually expressed in rupees per share of the stock owned. The other is capital appreciation, under which the investor sells his holding for a profit if the stock price increases beyond the purchase price. For example, if an investor pays Rs 1,000 per share of a company’s stock and the price of the stock rises to Rs 1,500 a share later, the investor will make a 50 per cent profit by selling his shares.

While there are chances of building wealth, one could lose money too. So, how exactly is the wealth built? What should one invest in and how? The lockdown period led to a spike in learning the intricacies of investing in the stock market. “There has been a massive spurt in retail activity, says Alok Jain, a Sebi-registered investment advisor and Founder, Weekendinvesting.com. “That can be gauged not only by the sharp inflows into mutual funds and equities especially in the first few months post the crash, but also by the record number of new demat accounts opened at the depositories. From my own experience as an advisor during the past six months I have seen more than 100 per cent growth of business over the same time last year.”

The Covid pandemic has brought within its sway everyone from mid-career professionals, to housewives, to retired persons and even students, each looking at ways to grow their money. But what should you equip yourself with, before embarking on the stock journey?

What you need 

There are innumerable trainers who give the lowdown on basic understanding of capital markets. Says Tejas Khoday, Co-Founder & CEO, Fyers Securities: “People have been signing up on various portals to understand the basics of the capital market where they can learn how to trade within a week. Some of the most credible programmes include the CMT (Chartered Market Technician), CMA (Chartered Market Analyst), and NISM (National Institute of Securities Markets) certifications, which help deepen one's understanding of the markets. NISM, an education initiative of Securities and Exchange Board of India (Sebi), has courses in the Rs 2,000-20,000 price range.” 

If you’re interested in market behaviour, the gap between intrinsic value and market price, behavioural finance, quantitative systems design and risk management, the CMT programme is for you. NISM conducts certification exams for various securities market participants and intermediaries as mandated by Sebi. Says Ankita Khare, NISM: “Anyone who is keen on learning about the Indian securities markets may also take these exams. There is no eligibility requirement with regards to age and educational qualification to take the NISM Certification Examinations." Details regarding NISM Certifications are available here,  and NISM academic programmes, here. 
 

If you are looking for a job as an analyst or a trader, then you must have qualifications like an MBA, CA or CFA. However, most people currently are looking to become equity investors. For this, any individual with some capital, a bank account and a stock trading account can participate as an investor.

What is the minimum amount you should have in your bank account to get started?  Says Khoday: “For the beginner, I would say Rs 50,000-1,00,000 is good enough but that only gets you started and helps you learn the tricks of the trade. Others looking for side income need a capital of Rs 2 lakh-plus. Give yourself 2-3 months to understand the nuts and bolts.”

Entry into the stock market as an equity investor is both age and gender agnostic. Data from Fyers illustrates a 15-20 per cent traffic by women and over 10 per cent active women traders--that's a 3X increase in active women traders the past four months. Women are more inclined to invest than trade. The duration of their trades tends to be slightly higher and they have wider stop losses. In terms of expectations, they want high profits in a very short period without too many entry/exits. But this could also be because most of them are first-time investors.

Even students seem interested. An edtech company called MyCaptain dealing primarily with college students finds finance and stock markets to be among their bestselling courses. Says Sameer Ramesh, co-founder of MyCaptain: “We are not dealing with working professionals, but college students who don’t have that kind of capital to exactly start investing in the stock market. However, we find that they are keen to know more about the jungle called the stock market, how it works and how to approach it. The basic idea is not to actually invest money but to understand how to invest.”

Stock: Theory or practice?

Trading courses are worth it if you find trainers who trade for real. By spending money on a good trading course, you reduce the learning curve dramatically. Take the case of Sujeet Mehta, a senior executive in a multinational company who attended a “Masterclass on Technical Analysis” priced below Rs 1,000 and lasted 15 hours. Being an MBA from IIM Ahmedabad, he was quite aware of the fundamental analysis of a stock but wanted to gain more insight on how to evaluate a stock using technical analysis. Says Mehta: “The best part of the edtech learning is the convenience and choices a user has to select courses that suit his/her requirements. There are certain basics that you can learn.” He cautions that one must be aware of the risks associated with investing in stocks. “If you are not careful, you may end up wiping out your entire capital very soon. Remember, you are playing with real money here and half-baked knowledge can be dangerous.” There is no quick-fix solution and no one can claim to master the art just by doing a few online courses. Like any other profession you need to learn the skill over years of practice before making it a serious part-time profession. 

Says Jain of Weekendinvesting.com: “Experience remains the only way to teach yourself to win in this market. You can read as many books, do as much simulation, but the real deal is the real deal. Of course, a lot of reading does prepare your absorption capabilities. How you will behave when you are pushed against the wall is the real test of your character and whether you can stay true to your rule book at that moment. I am sure many of these courses can help prime you in the right direction. There are immense free resources also available on the web and on twitter that one can use.” 

The right reason to get into stocks

"The right reason is a natural interest to study capital markets and stocks and only passion can lead to sustained income, says Jain: “And it’s not the other way around. While the rally is on, everything seems hunky-dory and all decisions seem to go right. The real test is seen over an entire economic cycle. This is probably the toughest business in the world and to be successful on a sustained basis over the long term is a challenge.” 

Finance expert Sharad Jhingan agrees: “The stock market itself is a game for seasoned investors. You cannot just think of becoming a day trader from tomorrow and start minting money. It’s a misconception that people only make money here--in fact, most of the money is lost. Ultimately the market is nothing but the collective wisdom of rich investors, HNIs and companies, and can be very unpredictable.”  

Sometimes a crisis gets the best out of people. Covid has been a time for great learning in general and tapping into one’s hidden potential. Says Irwin Anand, MD Udemy India: “We see doubling of the traffic, users and enrolments not only in India but everywhere in the world. The enrolment in courses on stock trading and financial analysis has increased by 360 per cent. I would say the system in the past would help us become successful but today it’s up to us, as to what actions we take in terms of investment in ourselves, which will help us navigate and address the challenges and opportunities of the future.” He shares a piece of advice for everyone to invest in learning: “I feel during the lockdown, you must block yourself from thoughts about the future but at the same time, utilise your extra time in what you want to do and what should you be investing in terms of career growth. You can familiarise yourself first of all with a few things and wherever you are getting interested, explore deeper. Learning is the new currency.”

Caption: Become an informed investor before you jump into stock market investment and trading. A broker in the picture is seen taking Stock of the stocks

Table 1: Most popular courses at Coursera since March 2020

Course	University	Duration	Price
Financial Markets	Yale University	Approx 32 hours	Rs 2,183
Trading Basics

Indian School of Business Approx 8 hours Rs 3,689/month (after 7-day free trial) Introduction to Financial Markets   Indian School of Business Approx 8 hours  Rs 3,689/month (after 7-day free trial) Personal & Family Financial Planning University of Florida  Approx 15 hours Rs 2,183 Python and Statistics for Financial Analysis The Hong Kong University of Science and Technology  Approx 13 hours  Rs 2,183 Portfolio and Risk Management Indian School of Business Approx 9 hours  Rs 3,689/month (after 7-day free trial) Financial Accounting: Foundations University of Illinois at Urbana-Champaign Approx 13 hours  Rs 3,689/month (after 7-day free trial) Understanding Financial Markets University of Geneva Approx 11 hours Rs 3,689/month (after 7-day free trial) Financial Engineering and Risk Management Part I Columbia University Approx 18 hours Rs 2,183

Firm Level Economics: Consumer and Producer Behaviour

University of Illinois at Urbana-Champaign Approx 16 hours Rs 3,689/month (after 7-day free trial)

Source: Coursera

Table 2: The School for Certification of Intermediaries (SCI) at NISM 

The insititute is engaged in developing certification examinations for professionals employed in various segments of the Indian securities markets. These examinations are being developed by NISM as mandated under Sebi (Certification of Associated Persons in the Securities Markets) Regulation, 2007
NISM Exam	Test Duration	Fees (Rs)	Certificate Validity (years)
NISM-Series-VIII: Equity Derivatives Certification Examination	2 hours	1,500	3
NISM Series-XII: Securities Markets Foundation Certification Examination+	2 hours	1,770	3
NISM Series-XIII: Common Derivatives Certification Examination	3 hours	3,000	3
NISM Series-XV: Research Analyst Certification Examination	2 hours	1,500	3

Source:NISM