Indians and stock markets

14 million Demat accounts were created afresh recently, in comparison to just 4.9 million accounts, last year. So, is this something, one needs to cheer about?

No doubt, pandemic has really affected the economy at the global level. Many businesses experienced slowdown at the unprecedented level, this makes much sense in case of emerging nations like India. The macroeconomic cycle has been disrupted, which inexorably led to the decline in the income of people.

So, people are in search of the employment opportunities so as to augment their income. According to a report, there was a reduction in the income of households in the range of more than 45 % in comparison to the previous year.

So, the stock market is the right option?

At present, when one has to restrict himself or herself to a level of virtual identity on internet, and also, when other formal or informal sectors are shutting down for an indefinite period of time, investing in stock market seems to be the best available choice. If we glance through another prism, stock market seems to be the only option, for most of the educated Indians, as of now.

It is indeed imperative and crucial, that people invest their money, so that invested money can play its fruitful role in the investment process. But, high investment in stock markets is not actually the harbinger of economic development, as has been explained in earlier articles.

High investment in stocks might seems to be an act of folly, rather than an act of wisdom. A sense of wisdom will prevail, when people invest in the companies that are actually productive in terms of creating employment opportunities and better economic environment. At the same time, it is equally true that, selling of shares will pump more money in the development of a particular industry.

So,stock market will make the people wealthier?

 It might be possible, as stock market is not a zero- sum game.like gambling. But, the investment in stocks in India is still on the lower side and is still function upon lot many variables. Indians are skeptical in nature. and they feel confident in investing money in financial instruments of banking. They believe on the dictum that, “less money but assured money”. The soaring of Demat  accounts, at present, seems much on account of a domino effect, rather than, on account of changes in the inner belief systems of the people.

Need of sagacity on people’s part

Whosoever is investing in the stock market, should be crystal clear with one concept in mind. Money invested in stocks is not only a function of one’s profundity, but, at the same time, also rests upon other attributes like patience. In Warren buffet’s own words ” the stock market is a device for transferring money from the impatient to the patient”. Therefore, if one has to keep patience for something, then, it is not an easy money game.

About the author

vipal

My name is Vipal Bhagat, going to be doctorate in applied economics. My aim is to analyse and interpret the current economic happenings around us, according to the core and basic principles of economics.

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