Imagine a cricket stadium filled to its capacity, brimming with spectators. Now imagine if all these spectators decide to step onto the pitch and play the game instead of merely watching it. Sounds chaotic, right? A similar scenario can be visualised if 80 crore Indians decide to invest in the stock market.
- Increased Participation: As per 2022 data, only around 4.5 crore Indians invest in stock markets. That’s like the audience of one IPL match in a country that can host about 2000 such matches. The market depth would increase significantly with such high participation.
- Market Dynamics Change: When everyone is in the market, it’s like a cricket match where every player is a batsman. There will be more demand for stocks and potentially higher market volatility.
- More Efficient Market: More participants can lead to a more efficient market. Just as every batsman brings unique skills, diverse investors bring different perspectives, making the market pricing more reflective of underlying realities.
- The Web3 Angle: The future of finance could look entirely different with blockchain and decentralisation. Think of it like a T20 match on the blockchain where everyone can become a listed entity and trade their personal tokens.
- Risk of Speculation: If every Indian becomes a trader instead of an investor, it could lead to increased speculation, somewhat like a T20 match with every ball aimed to be a sixer, which isn’t a sustainable strategy.
The stock market isn’t a stadium where everyone can or should play at the same time. A balanced approach with some players on the pitch (investors in the market) and some in the stands (keeping money in less volatile assets) leads to a better game (financial system).
