Data backed insights into the key industry trends
Let’s look at the Indian retail broking industry and how it has transformed.
The remarkable transformation of the Indian Retail Broking Industry, especially post-COVID is something most of us are aware of. Who would have thought that a trading account would be up and running in just a matter of a day?
The Indian retail broking industry has transformed significantly in the past decade due to the adoption of digital platforms and innovative pricing models like flat fees and zero brokerage.
Angel Broking Ltd. reported its Q4 FY24 result a few days back. Along with the result, the company also shared some crucial sectoral insights that we thought would be useful to share with all of you. So here we go…
Some KEY trends that are playing out in the Indian Retail Broking Industry
A. Rampant DEMAT Account Growth
Due to the growing awareness of equities and increasing disposable income, the number of DEMAT accounts has witnessed exponential growth. Over the past 12 years, India’s population increased at an annual growth rate of 1% from 2011 to 2023, while the number of DEMAT accounts surged at an annual growth rate of 18% during the same period.
In 2011, there were 2.04 Cr. demat accounts which grew to ~15 cr. by the end of 2023. This shows that DEMAT accounts as % of the population has grown significantly.
B. “Rest of India” is leading the race
Over the past 3 years, there has been a notable shift in the demographics of retail investors investing in stocks and mutual funds. Previously, the majority of investment originated from the top five states. However, recent trends indicate that a significant portion of investors are now emerging from areas beyond these major states.
Equity market participation has significantly grown from tier 2/3 cities and even rural India.
Today, the top 5 states account for 48% while ‘Rest of India’ accounts for 52% which is significantly higher relative to the pre-COVID scenario.
C. The Rise of Digital Brokers
Companies like ZERODHA, UPSTOX, GROWW, ANGEL, etc. have become household names these days. These are some prominent retail brokers that have joined the bandwagon of revolutionizing the industry by offering lucrative pricing models. This is why they are called “Discount Brokers”.
Digital brokerage firms have transformed the brokerage industry. By offering zero or flat fees and the convenience of mobile investing, they have attracted a growing number of investors.
While there are numerous choices available for investors, the top five brokers dominate the market with a 64% market share. This is due to the low-cost offerings and user-friendly interface that these brokers offer.
D. Increasing Regulations
The rampant growth of Indian Capital Markets has forced SEBI (the regulator) to put increasing guardrails. This is not forcing the retail investor to hold back. Consequently, DEMAT accounts and cash in the industry have grown tremendously and currently remain at an all-time high.
This shows that regulation had positive effects on the industry, alleviating some worries of the investors.
So next time when you have a conversation with your friend or a colleague regarding this subject, you now have much more data to share and drive your points home.
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