Until the pandemic, India’s stock market was like another world that Dilip Kumar never had a reason to visit. But like so many other people around the world who were stuck at home, he began to see it as the place to be.
Mr. Kumar, a proposal administrator at an engineering company in New Delhi, set up a free stock trading account through Zerodha, India’s largest online brokerage firm, and plowed some of his savings into Indian Railways as well as a clothing retailer and a cinema chain.
“I invested in all the things I was using daily,” he said. Since then, he’s gotten “a big return in quick time” — more than doubling his money in a little over a year.
Plenty of others want in on the action.
India’s booming stock market is drawing both local novices and global investors to shares of the financial, industrial and technology companies that dominate its listings. The MSCI India index is up about 30 percent this year — nearly twice the return of the global index — while India’s benchmark 30-share S&P BSE Sensex is up roughly 25 percent. Both have notched a seemingly relentless string of record highs, soaring on factors including simple demographics, governmental and fiscal policy and geopolitical changes.
The enthusiasm is clear from the initial public offering this week for the parent company of the digital payments platform Paytm. The company hit its target of raising $2.5 billion — making the offering the biggest in the country’s history and valuing the company at more than $20 billion. The offering underscored the momentum of the financial and tech sectors in a country with a predominantly young population embracing digital start-ups.
At the same time, the government of Prime Minister Narendra Modi is trying to make India more self-reliant, a boon to domestic businesses offering everyday goods and services, while trying to bring more citizens — and their money — into the formal economy. And this spring, the Indian central bank embarked on a bond-buying program that’s a smaller version of the sort that has lifted stocks around the world.
Combine those factors and it’s a recipe for a retail investor boom: According to the Securities and Exchange Board of India, new securities-holding accounts have risen to an all-time high.
“There is pent-up demand among the upper middle class, who have been rushing to the market,” said Jiban Mukhopadhyay, a corporate economics professor emeritus at the S.P. Jain Institute of Management and …….