Demat accounts surpass 10 crore mark for the first time

In August, there was 10.5 crore Demat accounts in India, surpassing the 10 crore mark for the first time as a confirmation of the increased interest of individual investors in the Indian stock market.

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More than 22 lakh new accounts were registered in August, according to statistics provided by National Securities Depository Limited (NDSL) and Central Depository Services (CDSL).

According to NDSL and CDSL statistics, 34 lakh new Demat accounts were added in January to the current 84 lakh. In February, about 29 lakh accounts were opened, 28 lakh in March, 24 lakh in April, 27 lakh in May, 18 lakh in June, 18 lakh in July, and 22 lakh in August.

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There was 4.09 crore Demat accounts in March 2020, just before the coronavirus pandemic in India.

Retail investors turned to the stock market due to low-interest rates, and the necessity to supplement income because of job losses and business harm done by the lockdown.

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The ease of registering for an account, increased mobile and broadband penetration, and lower brokerage costs all contributed to the trend, with a substantial portion of investors coming from smaller cities and villages.

The 10-crore mark indicates that retail investors’ desire is far from fading, as some market observers predicted.

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The increasing investor engagement, in the opinion of experts, benefits India’s financial markets and increases the availability of equity capital for businesses.

“Growth in the Demat account tally has a high correlation to the state of the market. A bullish market will get a lot of newer investors into the market fold. This is why we had that slight dip during the first quarter in new account openings but now things are again looking up. There is also a strong IPO pipeline, going by the number of filing and this, too, will help increase the Demat count,” said E Prasanth Prabhakaran, MD & CEO, YES Securities.

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A Demat account, also known as a dematerialisation account, is an electronic record that keeps track of who owns marketable assets.

It simplifies the process of owning investments such as stocks, bonds, and mutual funds by eliminating the hassles of paperwork.

Separately, FIIs purchased shares for a net Rs 22,025.62 crore in August 2022, while DIIs sold shares worth a net Rs 7,068.63 crore.