The market is wooing retail investors, not banks. This is the reason why 20 million new Demat accounts were opened for investing in the market in the last 16 months. Due to the continuous reduction in the interest available on savings accounts to fixed deposits in banks, now common investors are getting attracted towards the stock market.
According to sources, the government also wants people to invest their money in the market. This will encourage new companies to enter the market. At the same time, tax cannot be evaded in the case of market earnings.
According to stock market data, the number of Demat accounts with Central Depository Service (CDSL) and National Securities Depository (NSDL) stood at 60 million at the end of June this year. In February last year, there was 4.02 crore Demat accounts on both these platforms. SIP accounts are also increasing along with Demat. According to the data of the Association of Mutual Funds in India, the number of SIP accounts stood at 3,88,35,530 as on May 31 this year, which increased to 4,02,02,651 till June 30.
According to market experts, the interest rate of fixed deposits is running between 2.9 to 5.4 percent since the repo rate was 4 percent. Interest is getting at the rate of 7.6 percent on Sukanya Samriddhi Yojana, 7.4 percent on Senior Citizen Savings Scheme, 7.1 percent on Public Provident Fund and 6.8 percent on National Savings Certificate.
According to experts, it is generally seen that by investing money in the market for five years, returns are given at the rate of 10-12 percent. During the Corona period, people were attracted to trading in the stock market. The Sensex has just crossed the level of 52,000, while in March last year, the Sensex was at the level of 26,000. Accordingly, in April-May last year, those who invested in the market earned a lot of money.
However, experts are also apprehensive that the sentiment of retail investors depends on the outperformance of Sensex. The extent to which the bullishness in the stock market is permanent, cannot be estimated. On the one hand, the stock market is rising, while the real economy seems to be affected. At the same time, Foreign Institutional Investors (FIIs) have invested $ 36.18 billion in India in the last financial year. This could also be the reason for the rally in the market.