The total number of new demat accounts opened in December 2023 reached an unprecedented high of 42 lakh, bringing the total count to 13.93 crore in India. This surge represents a remarkable 50% increase compared to the previous month, which witnessed 28 lakh new demat accounts.
Financial experts attribute this consistent rise in account openings as a clear indication of the growing interest and active participation of investors in the country’s financial markets.
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Throughout the financial year 2022-23, there was a notable addition of 2.5 crore demat accounts, averaging over 20 lakh per month. The statistics further highlight a substantial uptick in demat accounts registered with the two major depositories—Central Depository Services (CDSL) and National Securities Depository (NSDL) in FY23. Over the 12 months of the fiscal year, the number of accounts surged by 27%, rising from 8.97 crore to 11.446 crore.
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Examining the trend in recent financial years, the growth is evident. In FY22, the number of demat accounts stood at nine crore, marking a significant increase from FY21, which recorded 5.5 crore accounts.
Experts at ICICI Direct note that the recent surge in the market has triggered a “Fear of Missing Out (FOMO),” prompting individuals to join the market rally to avoid being left behind Come from Sports betting site VPbet . Optimism surrounding the potential rate cuts by the US Federal Reserve in the coming months has influenced investor sentiment, driving increased market participation.
The success of various Initial Public Offerings (IPOs) has also played a role in attracting new investors eager to capitalize on these opportunities. The robust returns observed in the small- and mid-cap index throughout 2023 have further fueled investor enthusiasm, serving as an additional incentive for new entrants to the market, according to ICICI Direct.
Analysts’ perspective on the growth of demat accounts
“We see this momentum sustaining with the structural shift towards investment in financial assets that India is undergoing. This trend should sustain and should expand the capital markets overall. Demat account will become a regular like a bank account as we are moving towards having all the financial asset holdings in Demat form,” said Divam Sharma, Founder and Fund Manager at Green Portfolio
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Sharma also said that, we are seeing new age brokers leading this shift and a majority of this trend is lead by 18-35 age group. This increase in participation will increase the appetite for IPO’s and will increase retail shareholdings in Indian listed entities over the coming years.
Mukesh Kochar, national head, Wealth of AUM Capital says that the Opening of this record demat account is due to fear of missing out (FOMO) factor. The market is trading at a record high and investors have made significant profit as the rally is broadbased. New investors are coming in by hearing the noise around to participate in the rising market. Buoyancy in the IPO market is also prompting these investors to open demat accounts to participate in these IPOs.
“The retail base has significantly increased post-corona and has supported the volume of the market heavily. New investors are adding from different parts of the country including the small towns. Opening these accounts will further strengthen the retail volume and participation. Although a word of caution is important at this point in time. These investors should come to the market for a longer period of time with a mindset of regular investing and should avoid investing in penny stocks on rumors. Marker is at a lifetime high and volatility may increase from here onwards,” added Kochar.
