Demat Accounts In India Cross 10 Crore; Here’s Why Investor Participation Is Rising In Equity Markets

In an indication of rising retail interest in the Indian equity market, the total demat accounts in the country touched 100.5 million in August, crossing the 100 million-mark for the first time ever. During the month, more than 2.2 million new accounts were opened, which was the most in four months. Experts said that the higher participation of investors bodes well for financial markets in India and also makes available equity capital for companies.

According to the latest data from depository firms National Securities Depository Ltd (NDSL) and Central Depository Services Ltd (CDSL), the total number of demat accounts in India stood at 84 million in January. During the month, 3.4 new demat accounts were opened. About 2.9 million accounts were opened in February, 2.8 million in March, 2.4 million in April, 2.7 million in May, 1.8 million in June, 1.8 million in July, and 2.2 million in August.

In March 2020 just before the outbreak of the coronavirus pandemic in India, the country demat account tally was 40.9 million.

Axis Securities MD & CEO B Gopkumar said, “Demat account surpassing 100 million (10 crore) for the first time shows that the culture in equity investing is slowly but steadily picking up in India, especially in tier-2 and tier-3 cities, which were under-served till now.”

He added that higher participation of investors bodes well for the depth and development of equity markets in India, along with the availability of equity capital to companies through primary issuances. “The 100 million-mark is a remarkable milestone for the Indian capital markets and economy.”

The Sensex at the end of March 2020 was at 28,265.31 points as on March 30, after witnessing a major fall due to the pandemic-induced lockdown. It now stands at 59,196.99 points, which is about 110 per cent growth since March 2020.

Kush Ghodasara, independent market expert, said, “After the pandemic, investment in financial markets through the mutual fund is on the rise and with the government trying to demat most of the financial documents, people are opening demat accounts for e-storage. We believe that now, demat is going to be a necessity with even insurance going in de-materialised form.”

During the past two years, NSDL’s custody value increased from Rs 174 lakh crore in April 2020 to Rs 320 lakh crore in August 2022. This indicates participation from both retail and institutional investors, according to NSDL Executive Vice-President Prashant Vagal.

In August, CDSL operated 71.6 million demat accounts with a total assets under custody (AUC) of Rs 38.5 lakh crore and NSDL had 28.9 million accounts with AUC of Rs 320 lakh crore.

Rakesh Mehta, chairman of Mehta Equities, said, “After the pandemic crash, the market has created lifetime opportunities for all those who had missed the India growth story towards the $5 trillion economy. All credit goes to increasing financial awareness and lots of IPOs like LIC, Adani Wilmar and Paradeep Phosphates which generated high interest and profits, pushing investors to participate more in secondary as well as in primary markets.”

He added that the world is grappling with economic woes but India is on track to get economy to its $5 trillion. India has turned out to be the preferred investment destination globally as well as in domestic.

“I believe the next decade would be for India and this 100 million demat accounts can easily grow multi-fold from here with the support of digitalisation. India is leveraging its population to become the largest economy with working age population in the age group of 25-45 years would also exceed China’s by 2023,” Mehta said.

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