Equity For All: The Growth and Implication of Retail Investors in India

Abstract

The Indian equity market has experienced a significant surge in the number of retail investors over the last decade due to many factors, such as digitalization, demonetization, enhanced financial literacy, and diverse investment options. This shift has given more accessibility to equities, particularly in tier-2 and tier-3 cities, a significant increase in Demat account openings, and switching from traditional to market investments. Although retail investors have a significant share of the market's turnover, they possess limited experience and exposure to market volatility and, at the same time, expect unrealistic returns, which leads to enhanced difficulties in dealing with equities. However, SEBI, NSDL, and other sources are utilized in this study to analyze retail investor growth trends, challenges faced by these investors, as well as the wider implications for India's financial system. The findings were presented. The data gathered for SEBI and NSDL were applied to analyze the growth of retail investors, the challenges they face, and their implications in the equity market. The findings of this study reveal that retail investors need to enhance their investment education and rely more on regulatory protection, growth, and the safety of return of retail investors from market transparency to potential risks.