Over 63% of Indian Share Investors Provide a Power of Attorney to Brokers..!

Over 63%  of Indian Share Investors Provide a Power of Attorney to Brokers..!

Here’s a heartening revelation for brick-and-mortar broking firms — according to a SEBI survey ,based on 2015 data, majority of investors continue to prefer the traditional broking system for the purpose of trading, compared to online trading avenues.

A vast majority of 78% investors in India continue to ‘call in’ their trades, while just 22% use the Internet to place their trades despite growing dependence on online technology, a SEBI survey revealed on April 5, 2017.

The main reasons for not trading online include lack of awareness about the procedures related to web trading systems, besides significant technology aversion and inertia, the SEBI survey said.

The ‘SEBI Investors Survey 2015’ was conducted by Nielsen India to quantify actions and perceptions of retail investors and covered more than two lakh urban and rural households across the country. The survey also covered over 1,000 market participants, including brokers and mutual fund agents.

About 70% of investors prioritise the quality of services while deciding on the financial intermediary, the survey said, and added that while 50% of investors deem the financial soundness of the broker to be crucial and another 45%t focus on the broker’s image or reputation.

Underscoring the strong relationship with their brokers, over 63% cent of investors provide a Power of Attorney to their financial intermediaries, which allows the broker/depository participant to directly debit funds and securities from their accounts without their explicit permission.

This is indeed a large number considering the amount of leeway it can potentially provide, and the survey data confirm that 90% of investors are aware that it is not essential to give this right to their intermediary.

South Indians shy away

Nonetheless, when it comes to trust someone to make an investment decision, more than 40% of investors depend on themselves, the survey revealed. “This is a visible self-confidence bias indication, a much documented phenomenon observed in behavioural finance where the individual investor makes glaring mistakes in investments resulting in a loss of wealth due to over-trading, over confidence and behavioural biases.”

South Indians continue to turn away from equity investments. According to the SEBI survey, cultural/regional influences strongly impact the investment decisions.

Fifty per cent of all Indian investors are from the West zone, while a mere 7% reside in the South zone. The North and East zones constitute 26% and 15% respectively, the survey findings said.

While 27% of West zone respondents are investors, just 15%, 9% and 5% of respondents from the North, East and South respectively, invest in the securities markets.

The regional differences persist even among high-income and highly educated groups. “While 32 per cent of the population in the top-15 cities are investors, barely 1 per cent from the bottom-5 cities participate in the securities markets,” a key finding of the survey showed.

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