Gen Z bulls: Young investors dominate market, half under 30

India’s stock market is witnessing a significant demographic shift, with nearly 50 per cent of new demat account holders since March 2020 being under 30 years, according to the latest National Stock Exchange (NSE) data. This surge has pushed the total number of active investors to 10.7 crore as of November 2024, with 7.6 crore joining after the pandemic.

The average age of investors has declined to 35.8 years in November 2024 from 36.8 years in March 2024, while the median age remains steady at 32 years. The trend highlights an increasing involvement of younger investors in the market. Investors under 30 now account for 40 per cent of the total investor base, up from 38.5 per cent in March 2023. In comparison, this figure was just 22.9 per cent before the pandemic.

As of November 2024, the breakdown of investor share is 29.4 per cent for the 30-39 age group, 15.6 per cent for those aged 40-49 and 15 per cent for investors over 50. This marks a shift from March 2018, when the distribution was 31 per cent for the 30-39 age group, 20.3 per cent for those aged 40-49, and 25.8 per cent for investors over 50.

“Post-Covid, the market was heavily tilted towards euphoria. The Fear & Greed Index was at the extreme end of optimism. Now, it’s shifting, but FOMO still exists,” says Bruce Keith, CEO of InvestorAI, highlighting the role of social media in amplifying market sentiments.

The investment patterns of young traders reveal a preference for high-risk, high-reward strategies. “When you have less money to start with, you’re more willing to take risks. As you accumulate wealth, you start thinking more about capital preservation. That’s why younger traders lean toward high-risk, high-reward strategies like options and crypto,” Keith explains.

Initial investment amounts have seen a significant increase. “For young Indian investors aged 20-25, starting investments have grown significantly. It now ranges anywhere between ₹10,000 and ₹50,000 compared to ₹5,000 and ₹10,000 before the pandemic,” says Manish Goel, Founder and MD of Equentis Wealth Advisory Services.

Social media

The role of social media in investment decisions has evolved beyond mere influence. “Social media, in some ways, is just a faster version of what we used to do — talk to friends about stocks in a pub or a café. The real shift is that information arbitrage disappears much quicker now,” notes Keith.

However, experts warn about the risks associated with unstructured trading approaches. “The real danger is that young investors often don’t build balanced portfolios. They don’t diversify, and they buy stocks they don’t fully understand,” Keith cautions.

Changing preferences

NSE data reveal that systematic investment plans (SIPs) remain popular among young investors. “SIPs remain the preferred investment choice for most young investors, with about 60-70 per cent sticking to them because they are simple, reliable, and stress-free. However, post-pandemic, there has been a marked shift in interest towards direct stock trading,” Goel observes.

The surge in young investors has been particularly notable in certain regions. North India leads with 3.9 crore registered investors, followed by West India at 3.3 crore. States like Uttar Pradesh have seen remarkable growth, surpassing Maharashtra in new investor registrations with 2.1 lakh new accounts in November 2024 alone.

The NSE data show that 3.5 crore investors aged below 30 years have entered the market in the last four-five years. “Many of them do not have family members who have previously invested. From what we have seen, a significant number of young investors are turning to social media and online communities to gather information and validate details before making decisions,” Goel notes.

Despite concerns about social media influence, experts emphasise the importance of proper verification. “The problem isn’t the source — it’s how you verify it. That’s why platforms need to do a better job integrating education, exploration and analysis in one place,” Keith concludes.