Charge of the GenZ brigade: Young turks expand their turf on NSE

Mumbai: In a striking shift within India's investment landscape, GenZ investors are rapidly rising to prominence, nearly doubling their presence in the stock market compared to other age groups. 

Once a modest 22-23% before the pandemic, this cohort—defined as those under 30—now makes up 40.1% of the National Stock Exchange of India's (NSE) 95 million registered investors as of May 2024. 

This spurt underscores a broader phenomenon: the younger generation's growing appetite for speculative trading and quick profits. As market veterans observe, this surge in youthful participation is not just a fleeting trend but a potential game-changer for the Indian stock market, especially as traditional revenue streams continue to dry up.

Incidentally, this group has also been the biggest age-group on the NSE over the past three years, taking pole position in terms of number of users across age groups in FY22.

Nisarg Seth, a 28-year-old trader, said what motivates him to trade is that the job requires more of analytical skills, rather than labour work, or simply buying or selling a commodity. “I've also been seeing big names in the industry like Rakesh Jhunjhunwala and Vijay Kedia, who started their trading journey at a very early stage and made big money,” he said.

“The below-30 age group comprises those who are in for a quick buck, rather than tapping the market for serious investing,” said Dhiraj Relli, MD & CEO of HDFC Securities. “Options and intraday squaring off in the cash market are what attracts them. They are those who’ve just completed their education or those just started their working careers and, thus, prefer cheaper instruments like options.”

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Intraday squaring off means taking positions on stocks between market hours. If a position is not closed before end of trading at 3:30 pm, delivery has to be given or taken.

Lure of the quick buck

The rise of this investor group coincides with NSE's premium turnover of index options—the most popular traded product—surging 426% from ₹26.29 trillion in FY21 to ₹138.19 trillion in FY24.

The tally for the current fiscal through 2 July stands at ₹40 trillion. Cash market turnover on NSE has risen at a more sedate 30% from ₹154 trillion in FY21 to ₹201 trillion in FY24. The tally for the fiscal through 2 July (FY25) stands at ₹76.32 trillion.

The fact of the younger generation entering the markets is proven by the age of the median investor on Groww, the country's biggest brokerage by clients, being 29, said a company spokesperson.

"Mostly, GenZ is in the market for speculative activity," said Anand K. Rathi, co-founder of MIRA Money, a Bangalore-based mutual fund investment platform. “They are into buying options based more on hearsay rather than on taking informed decisions. They take loans from friends and family to trade.”

Asked about the count of such investors increasing with investor penetration being a fraction of the population, Rathi said in the long term the count would stabilize as those losing money would be replaced by other “newbies”.

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“There is no homogeneity in GenZ; some among them are smart investors doing outstanding research,” Nilesh Shah, MD of Kotak Mahindra AMC remarked. “Unfortunately, many others are traders trying their luck rather than using their skill.”

Rise of the young investor

The share of the under-30 age group began steadily rising post FY21, a year after the pandemic surfaced. GenZ overtook those between the 30 and 39 age group (millennial), with their share in the total registered investor base increasing from 29.4% in FY21 to 40.1% as on 31 May, as per NSE data.

Those between 30 and 39 saw their share decrease marginally from 30.4% to 29.2% over the same period. Other age groups also saw their share fall over the same period (see table).

Thanks to this decline in the other age groups, exchange data shows that the age of the median investor has dropped from 38 years in FY18 to 32 years currently. Similarly, the average age of the investor has dropped from 41 years to 36 years.

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Who invests on the NSE?

Interestingly, the maximum number of registered investors on NSE in the current fiscal through 31 May came from North India (33.8 million), followed by west (29.4 million), south (19.6 million) and east India at 11.2 million. Others, mainly army personnel, accounted for 0.9 million, for whom state mapping is unavailable, as per the data.

Among states, Maharashtra leads with 16 million investors in the current fiscal through 31 May (FY25), followed by UP (10.3 million), Gujarat (8 million), West Bengal (5 million) and Rajasthan (5 million). These five account for 48% of the total investor base of 95 million.