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Savvy investors are using mobile phones to trade in equities

June 12, 2019 14:59 IST

The proportion of cash market trades carried out through mobile phones has risen to 10.51% on the NSE and to 5.84% on BSE thanks to higher smartphone penetration, lower data charges, and booming stock markets.

Trading via mobile phones has risen over 10 times in the past five years, according to the data from Sebi, the National Stock Exchange (NSE) and the BSE.

This has come on the back of higher smartphone penetration, lower data charges, and booming stock markets.

 

The proportion of cash market trades carried out through mobile phones was under 1 per cent in May 2014.

It has risen to 10.51 per cent on the NSE in May 2019 from 0.9 per cent in May 2014.

On the BSE, it rose 19.5 times from 0.3 per cent in May 2014 to 5.84 per cent in May 2019.

A similar trend has been seen in the derivatives market where, for example, the mobile share is up from 0.5 per cent to 3.94 per cent on the NSE.

Some have reported higher figures.

"For us, 60-65 per cent of the transactions is done through mobile phones.

"We were doing 25-30 per cent earlier and are now doing over 60 per cent.

"Mobile is contributing a lot even in our business where active traders like to use desktops.

"India is probably the first country in the world where people are going mobile first for the internet.

"The trend is going to continue and cellphones are influencing the way people trade. The number of call in trades has reduced over the years," said Nithin Kamath, founder and CEO at discount brokerage Zerodha Broking.

The head of another broking firm said mobile-based trading accounted for 15-18 per cent of the revenues of major brokers.

This also results in significant savings in costs.

“You don’t have to call customers. Your transaction cost is very high when you do it through a dealer,” said the person.

The increased share of mobile trading, a mode favoured by retail investors, comes even as the stock markets have risen to all-time highs.

The benchmark Sensex crossed the 40,000 mark in May, up over 75 per cent from its May 2014 opening level of 22,493.

Data costs plummeted around the same time, bringing more people on to cellphones.

There has been a 95 per cent decline in data costs since 2013, according to a March 2019 report by a division of consulting firm McKinsey & Company.

The absolute number of people with access is expected to rise further.

“Based on current trends, we estimate that India will increase the number of internet users by about 40 per cent to between 750 million and 800 million and double the number of smartphones to between 650 million and 700 million by 2023,” said the McKinsey report.

An increasing number of people prefer to make their investments through mutual funds and other institutions.

This has led to increased institutionalisation of the market, a trend which may result in a lower overall share of retail investors in the market.

This would be in-line with what has happened in more developed markets.

“It looks likely over a period of time,” said Amnish Aggarwal, head of research at Prabhudas Lilladher.

This, by extension, would mean that the share of mobile phones would also have a ceiling since cellphones are not used for trading by institutional investors.

Photograph: Danish Siddiqui/Reuters

Sundar Sethuraman & Sachin P Mampatta in Mumbai
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