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Tuesday, September 29, 2020

Ajay Tyagi: ‘First-time investors should invest in G-Secs, then move to other securities’

Speaking at Ficci’s annual capital market conference, Tyagi cautioned these investors, asking them to first invest in risk-free government securities (G-Secs) and gradually move to other securities.

By: ENS Economic Bureau | Mumbai | July 23, 2020 3:17:38 am
Sebi Chairman Ajay Tyagi. (File)

Securities and Exchange Board of India (Sebi) Chairman Ajay Tyagi on Wednesday said there has been a huge surge in participation of first-time investors in the equity market, after the lockdown to contain the COVID-19 pandemic was imposed this March.

Speaking at Ficci’s annual capital market conference, Tyagi cautioned these investors, asking them to first invest in risk-free government securities (G-Secs) and gradually move to other securities.

“We have seen a huge surge in participation of retail investors in the equity market in the last few months. The fact that there is also a surge in opening up of demat accounts suggests that many of these retail investors are perhaps first-time investors in the stock market … With a view to facilitating a smooth and welcome entry of these newcomers to the capital markets, it would be ideal that they begin their journey by first investing in risk free G-Secs.

“I would suggest that, to achieve this, the G-Secs may be issued in demat form. These new demat account holders, after gaining experience of investing in G-Secs, could then gradually add other securities to their demat accounts,” the Sebi chief added.

Tyagi said increased retail participation is not a cause of concern, and the increased retail participation is a sign of investors placing their trust in corporates and companies should ensure the trust is not broken.

The Indian Express recently reported that over the last three months, the Central Depository Services Limited (CDSL) added 19.6 lakh investor accounts at an average of 6.5 lakh a month. By comparison, the average investor addition by CDSL in FY20 stood at 3 lakh a month. NSDL, on the other hand, added an aggregate of 1.74 lakh investor accounts in April and May 2020.

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