Stock market movements make headlines every day.

How many people invest in stock markets in India? Which state has most stock market investors in India? The BSE data used unique client codes to identify the number of stock market investors in each state and union territory. All investor accounts are linked to a demat account, though there maybe duplication, for example with one demat account connected to investor accounts with more than one brokerage. A total of It was not defined for 4. The exchange updates the data daily.

The analysis used numbers from 20 February Gujarat, Tamil Nadu, West Bengal and Uttar Pradesh are the other top five states in terms of percentage share in total stock market investors. Click here for enlarge.

India Stock Rally Needs More Domestic Retail Investors - Bloomberg

What explains this skewed distribution in number of investors across states? Urbanization and per capita Gross State Domestic Product GSDP seem to be bigger drivers for interest in stock markets than literacy. The first two have a correlation of 0. Literacy only has a correlation of 0. Another factor may be geography. The lowest penetration seems to be in areas far away from the main stock exchanges in Mumbai.

This is an interesting takeaway in an era of electronic trading.

Nobody has to be present in the trading ring to buy or sell shares anymore. Investors can get information through television and the internet. Yet, geographical distance still seems to play a role. It is important to note that these numbers are likely to be overestimates. Industry experts point to duplication in the number of demat or investor accounts, as one person often has more than one such account.

Many of the demat accounts are hardly used. Another pointer to the investor numbers being overstated lies in the tax data. There were only 4. Short term capital gains tax is paid for securities held for less than a year. It can also apply to other transactions such as land and gold. This means that not everyone who has filed gains or losses is talking about the stock market. Some of this seems to be on account of under-reporting.

However, subsequent releases of tax data shows that while the absolute number of such individuals has gone up for the next two years, there is a decline in terms of share in total number of filings. This would suggest stagnation in equity penetration. What explains this supposedly low interest in stock markets in India?

Mutual funds could be another factor. Satish Menon, executive director of the brokerage house Geojit, said that new investors who do not have the time or expertise to track markets on a regular basis opt for the mutual fund route.

Data from the Association of Mutual Funds in India puts the number of mutual fund investor accounts in India at 5.

To be sure, industry executives caution against assuming that there is no overlap between mutual fund and stock market investors or one mutual fund investor operating multiple accounts. This would point to a lot of duplication. Also only a quarter of demat accounts are said to be active, as was pointed out in story cited above.

Stock market - Wikipedia

Thus, the total number of actual investors for each state could be significantly lower than even the low figures given above. Stock markets have been around for a long time in India. The regulator has had some success in pushing mutual funds in smaller cities through the use of higher incentives.

Whether this success can be replicated in direct equities may be worth a debate. Home Companies Industry Politics Money Opinion Lounge Multimedia Science Education Sports More Technology Consumer Specials Mint on Sunday.

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