Average age of our investors have dropped to 30: Nikhil Kamath


New investors will be well advised to stay away from smallcaps and penny stocks and should not buy stocks based on a tip and SMS messages, says the Co-founder & CIO, Zerodha.


What kind of traction are you seeing? We have seen a lot more action in mobile trades as well with investors flocking to equity markets. Do you see further emphasis on mobile and digital and does that help to boost volumes further?
The trading will continue to move away from traditional EXE-based platforms onto mobile and web platforms. We see this trend continuing. In terms of the account opening and new investor interest which is coming into the market, it is a factor of many things.

A lot of it has to do with the interest rate cycle, how quickly interest rates have gone down and bank FD is no longer as appealing as they used to be. The plateauing of real estate yields in the last five years have not left many avenues for a retail investor to seek alpha. So this trend of people coming into the stock market is set to continue and with time we expect more retail participants.

How are you managing the platform? Do you look to make any changes on the backend to cope with the massive flow of investors that you are expecting to see?
We have ensured that we have significant capacity in place to enable us to facilitate trading seamlessly. We continue to look at any means by which we can improve the efficiencies of our platforms.

READ  Asia stocks trade mixed as Sino-US tensions weigh

There has been positive exuberance and the sentiment is reflected in the higher trading activity that one has seen in the last two, three months. Are millennials driving the rally or do you think that the trend is positive and buoyant across all age cohorts?
The trend is buoyant amongst many age groups or all the age groups. We have seen the average age of our investors drop from 32 to about 30, but one has to bear in mind that retail investors will be well advised to stay away from small cap companies, penny stocks and stocks which one might end up buying based on a tip and SMS messages and stuff like that.

People will be a lot better placed if they allocate a significant portion of the new capital coming in to quality largecap companies. This is something that new investors should bear in mind and that will be beneficial for the entire ecosystem as well.

The recent AMFI data indicated a dip in equity flows for mutual funds with HNIs moving out of mutual funds. How are you assessing the flows in mutual funds as well as the SIP category? Do you see the focus shifting to alternate fund managers instead?
A part of the downtick in flows that AMFI has recorded, can be attributed to the liquid fund exits that we saw because of declining interest rates. We do see people going into the alternate funds and this is a certain category of people who generally fall in the HNI and the ultra-HNI bucket.

READ  Barings Global Short declares $0.1408 dividend

But with a lot more time in hand, many retail investors are also choosing to go the direct path and avoiding the inefficiencies that a typical asset management company might have brought in by virtue of having a lot of fees and middle men in between.

Markets traditionally have been forward looking. The market price reflects more of what will happen a couple of years down the line and not necessarily the earnings and the news flow of today. The same might be repeating right now. It looks like investors are looking beyond the crisis and what may develop once the crisis is over.

We seem to be very closely linked and following the global indices because they might be at a more evolved state of the coronavirus because they had the peaks or a lot more exaggerated issue of corona there earlier than we had in India. It is very hard to question price action because traditionally when markets move ahead of news events, more often they may not have been right and I guess only time will tell if this move holds on in the next year or two.





READ SOURCE

LEAVE A REPLY

Please enter your comment!
Please enter your name here