Covid-19 : Over 1 million new traders join stock market during lockdown

According to data released by a Mumbai based share depository, about 1.2 million new stock trading accounts have been opened with Central depository Services (India) Ltd. in March and April. While in January and February, the compiling accounts numbered just 9,00,000. The increase in investment in stock markets during the Covid-19 Pandemic is also a trend in many foreign countries including the US.

In the past two months, as the economy suffered due to lockdown induced stress, the prices of many stocks including equity plummeted low. After which many stockholders sensing the high uncertainty about the performance of the stock market, Sensex and economy in future due to Covid-19 threat decided to sell off their stocks, especially the risk assets and equity shares. 

The valuation of these stock prices gauged very low to about a quarter of their three-year mean price. The selling of the stocks at a cheap price attracted heavy investments in them. And retail investors started buying and piling up equities as the optimist perception of the good rebounding of the market after the reopening of the economy formed among them. 

On 14 May, Finance Minister Nirmala Sitharaman announced to offer $72 billion in credit lines to small businesses and power distributors from the relief package announced by the government, which can further consolidate this good perception and bring more fresh investments in the stock market. 

Many new retail investors emerged in the stock market as the ‘Work from Home’ gave them a large space to look for opportunity in stock trading and venturing into it. Zerodha, the nation’s biggest online discount broker witnessed an increase of 20 per cent in first-time investors as their client, mostly under 30 years of age after their monthly account opening started to double since February as the availability of stocks at cheaper price excited many to invest in them.

Though the current excitement of new investors in the stock market may come down after all the repercussions of lockdown on the economy gets fully calculated which has not been done yet and the future scenario of the economy becomes apparent.

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