Demat Account Openings hit 18-month high in 2023 Amid Market Rally and IPO Boom

Key Takeaways:

1. The surge in demat account openings in FY24 is linked to the rising markets, increased activity in IPO issuances, and sustained low brokerage fees.

2. Despite the surge in demat account openings, the active client base has shrunk as market participants reduce trading due to volatile swings.

3. The total number of demat accounts as of August 31 reached 12.65 crore, marking a 10.7% increase from March 31.

4. Equity-focused market indices such as Nifty, Nifty Mid-Cap 150, Nifty Small-Cap 250, sensex and Nifty Micro-Cap 250 have shown significant gains since April 1, contributing to the surge in new account openings.

5. The surge in demat account openings is a continuation of the growth in the client base since March 2020, driven by individual investors venturing directly into the market due to the Covid-19 shutdown and low fixed deposit interest rates.

6. Brokers anticipate the growth in demat account openings to continue, particularly in smaller cities and towns across the country.

The surge in demat account openings at domestic broking firms in India during FY24, attributed to the stock market rally, low brokerage fees, and a surge in initial public offerings (IPOs). Despite the increase in demat account openings, the active client base has shrunk as market participants reduce trading due to volatile swings. Here are the key points from the text:

1. New Demat Account Openings:

The total number of demat accounts as of August 31 2023 reached 12.65 crore, marking a 10.7% increase from March 31. This surge in new demat account openings is linked to the rising markets and increased activity in IPO issuances.

2. Market Performance:

The Nifty, along with indices like sensex and Nifty Mid-Cap 150, Nifty Small-Cap 250, and Nifty Micro-Cap 250, has gained approximately 13.12% since April 1, contributing to significant increases in the equity market.

3. Surge in new accounts since March 2020: 

The surge in demat account openings is a continuation of the growth in the client base since March 2020, when the shutdown due to Covid-19 prompted individual investors to venture directly into the market. This growth has been further fueled by low fixed deposit interest rates, prompting increased interest in trading.

4. Expectations:

Brokers expect the growth in demat account openings to continue, particularly in smaller cities and towns across the country, with the anticipation of the number of accounts reaching 30 crore in the coming years.

This information indicates a significant shift in investor behavior and market participation, driven by various factors such as market performance, IPO activity, and changing investment preferences.



FAQ:

Q1: What factors contributed to the surge in demat account openings in FY24?

A1: The surge in demat account openings is attributed to the stock market rally, sustained low brokerage fees, and a surge in initial public offerings (IPOs).

Q2: How has the active client base been affected despite the surge in demat account openings?

A2: The active client base has shrunk as market participants reduce trading due to volatile swings, despite the increase in demat account openings.

Q3: What is the total number of new demat accounts under CDSL and NSDL as of August 31, and how does it compare to March 31?

A3: The total count of demat accounts as of August 31 reached to a record high of 12.65 crore, marking a 10.7 per cent increase from March 31.