Vanishing Retail Equity Investors in Indian Stock Market, a State of Melancholy and Gold Rush

Abstract

India has an atrocious retail participation in equity markets. There is an explicit commotion to bring the retail investor back into the stock markets. This situation strikes a chord o f 2007, when the stock markets bang all time highs and there was jubilation across the nation. Although Indian stock market has expanded in the post liberalization era, with regard to volatility the market has not demonstrated any momentous transform. This long-lasting volatility in the stock market since the global financial crisis has been a dispiriting issue fo r the retail investors to invest in equity markets. Due to high volatility, new clients are afraid to bum their fingers and existing investors are uncomfortable in roiling their portfolios. The cost o f trading in India remains relatively high. More pressure is levied on the overall brokerage revenue pool due to low retail equity participation. On the other hand, Indian's obsession towards gold is an icon o f opulence and appeals uniformly to youths and older generations across .social sections within the country. It has a distinctive position in the psyche of Indians and is deemed to be a source o f social security fo r a large segment o f the Indian society. The study aims to study the trends in the retail participation in the Indian equity market and examines the collective influence of gold jew ellery demand, gold investment demand and retail participation in Indian equity markets using the secondary data acquired from Money life foundation official website and World gold council website. Various statistical techniques such as trend analysis. Regression analysis is em ployed in the study. The trend projection highlights that the average daily turnover in cash market can increase three times in future more than the current state. Results reveal that most o f the individuals prefer to invest in various gold financial products such as Gold ETFs, paper gold etc., in India and individual investors are indecisive to buy equity shares and participate in Indian equity markets. The researcher also finds that there is insatiable demand fo r gold jew ellery in India that has been largely immune to retail participation in the Indian equity market. In addition, the researcher highlights that investors need to be financially knowledgeable in order to manage their finances especially