Ever since the pandemic hit India, those following the financial markets have often been baffled by the huge disconnect between what is going on in the equity markets, and the devastation caused by Covid-19. The one segment of the economy which has seemingly taken the pandemic in its stride has been the stock markets. After an initial setback in March 2020, when the benchmark S&P BSE Sensex hit its calendar year low of 25,639, the market has been on a roll, hitting its all-time high of 53,291 points in mid-July this year. This runaway rise has led to another phenomenon — the advent of thousands of new investors into the equity markets, hungry for information and advice on how and where to invest. Consider the figures: broking firms saw a million new client accounts being opened every month of the current calendar year. Between FY19 and FY20, the share of retail investors in the overall cash market turnover jumped from 39 per cent to 45 per cent, the sharpest rise ever seen in India’s equity markets, and the share has remained at 45 per cent in FY21 as well.
A consequence of this massive growth in the number of new investors is the rise of a bunch of smart, articulate individuals, with YouTube as their preferred medium of communication, who introduce these newbies to the key concepts of investing and the financial markets. And investors are flocking to these financial influencers — popularly known as finfluencers — in droves. These finfluencers aren’t only based in the big cities. Some of the most popular ones — with millions of followers — are from the smaller cities and towns. Yet, the ease with which they communicate to the new flock of investors has meant their earnings, from Google and by way of partnerships with several broking firms which use them to reach out to investors, are rising rapidly. It’s a win-win — investors get much-needed information and financial advice, broking firms reach potential new clients, and finfluencers make good money. These financial influencers, however, are careful not to give stock tips and tread very carefully when it comes to advice. In fact, some of them are also empanelled with the Securities and Exchange Board of India as Registered Investment Advisors. The central idea, they all agree, is to familiarise the new investor with the basics of financial investments and planning. In the process, they also serve the objective of financial inclusion.
Our cover story by Ashish Rukhaiyar takes a close look at this growing phenomenon of finfluencers in India, how they work, why they are popular and the manner in which they impart advice to investors.
On the subject of the markets, do read Anand Adhikari’s analysis of Paytm’s multiple growth engines in the context of the fintech major’s upcoming initial public offer (IPO). We probe whether Paytm’s engines will fire hard enough to justify the interest the IPO is already generating in the markets, and the challenges it could face. I am also delighted to announce that well-known financial markets expert and Global Business Editor Udayan Mukherjee begins his regular column, Animal Spirits, in this issue. That’s on page 14.
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