Poor retail participation? Not so sure!
The NSDL (the unregulated capital market player?) proudly claims that there are 1 crore demat accounts in the country. Funnily once upon a time (to avoid TDS) it made sense to create multiple folios (also if you wanted coupons for buying dhotis – Century, watches – Titan, ..) etc. So in one house with 4-5 people it was common to create 10 folios – AB, BA, ABC, AC, CA, BC, BCA,……then demat came and there was no COST of transferring from one to the other. So each ‘house’ opened at least 10 demat accounts. Then came E-broking. Each broker liked you to open a demat account to trade. So if you have been in the equity markets for say 20 years, chances are you have a demat account with Kotak, Hdfc, Icici, Stock Holding, …and maybe in a couple of others as well. If you remove the multiple accounts (easy – check the PAN numbers) I do not think the number of demat accounts is anywhere close to 1 crore.
2-3 aggressive brokers have shifted their sights to the lower end of the market (bottom of the pyramid). These ‘customers’ are easier to cheat and do not understand what they are doing. One company which has people earning between Rs. 1.5L to Rs. 4 lakhs has 180 E-broking accounts amongst its 208 employees. Not bad. Most of them would not know the difference between Sensex and Nifty. They all have lost money with this ‘chor’ brokerage house, but the demat accounts continue. Surely they must also be boasting ‘We have 10 lakh E-broking and demat accounts’. Well, numbers do not lie do they?
Normally not a fan of hard hitting stories in the press – (I keep searching for the reasons why this story has been done). However here is a story about why the retail participation is poor. I may agree only partially agree with this mail..but here it is: