Investors prefer 'call' over Internet to trade
When it comes to stock trading, a vast majority of 78 per cent investors in India continue to "call in" their trades, while just 22 per cent use internet to place their trades despite a growing dependence on online technology, a Sebi survey showed today.
The main reasons for not trading online include lack of awareness about the procedures related to web trading systems, while there is a significant technology aversion and inertia as well.
The 'Sebi Investors Survey 2015' was conducted by Nielsen India to quantify actions and perceptions of retail investor and covered more than 2 lakh urban and rural households across the country. The survey also covered over 1,000 market participants including brokers and mutual fund agents.
The latest study follows three earlier surveys Sebi had commissioned to know how households save and invest. The last such survey, by NCAER, was released in January 2012.
The survey also showed that to attract new clients, most market participants use face-to-face interaction (52 per cent), followed closely by mass media advertising (51 per cent) and phone calls (50 per cent).
While bulk SMS (45 per cent) is very popular, social media (17 per cent) is not yet a common practice, it found.
In case of receiving information, market participants showcased their tech-savviness with 40 per cent ranking social media as their most important source of information, followed by the company websites and then the mass media.
"Technology has been the primary reason for improving business for market participants, with improving technology and web access providing better margins and expansion possibilities," the survey noted.
According to the survey, more than 70 per cent of investors polled depend on financial planners and maintain running accounts/standing orders with their brokers indicating reliance on brokers and sub-brokers. Despite a strong relationship with the broker, retail investors continue to primarily trust their own judgment when making investment decisions.
"Limited retail trading frequency, rising internet penetration and a surge in the number of authorised persons is significantly altering the traditional dynamics of the brokerage industry. Smaller brokers are either disappearing or are merging to form larger and more stable consolidation," the survey noted.
It also noted that investors' base in India is increasing and nearly 75 per cent of the investors polled participated in the securities markets for the first time within the last five years. Interestingly, most retail investors trade either weekly or monthly and institutional algorithmic trading (computerised, automated trading) accounts for an increasing percentage of trades in the exchanges.