‘Most hated all-time high?’: Zerodha founder’s take on retail investors’ activity in current stock market rally

Even with the Indian stock markets at record high levels, the retail investors’ participation and activity is not nearly as much as it was when the markets had hit the record high level during the same time last year, said Bengaluru-based online brokerage firm Zerodha’s founder and chief executive Nithin Kamath.

“Most hated all-time high? 
While markets are at all-time highs, the momentum in retail participation and activity is not nearly as much as it was at all-time highs this time last year. The monthly new demat account openings are down ~40% even though markets are back to highs,” said Kamath in a tweet.

A demat (dematerialization) account is for investors to hold their variety of investments such as shares, mutual funds and securities in an electronic format.

The Indian stock market has outperformed most emerging markets (EMs) this year with the benchmark indices Sensex and Nifty surging back to record high levels as foreign institutional investors (FIIs) doubled down on Indian shares in November 2022, and, as per experts, are now holding the highest quantity of bullish bets on Nifty and Bank Nifty futures in three years and seven months.

Meanwhile, global stocks were subdued as optimism over signs the Federal Reserve may temper its aggressive interest rate hikes was replaced by worries the economy might be headed for a recession.

The US Federal Reserve Chair Jerome Powell recently signaled a pivot in monetary policy away from ultra-aggressive interest rate hikes to counter inflation. Powell said that the US central bank could slow the pace of interest rate increases as soon as at its December meeting. However, several Fed officials including Powell have lined up to warn that rates will continue to rise and stay elevated, with the possibility of no cut until 2024.