People's inclination towards the equity market for investment has also increased in the country. People are choosing to invest in equity markets with research besides traditional means. The number of Demat accounts increased by 41 percent to Rs 10.4 crore in the month of October following attractive returns in the equity market.
According to Motilal Oswal Financial Services, growth in Demat accounts has slowed down since August. The addition was 26 lakhs in August which declined to 20 lakhs in September and further decreased to 18 lakhs in October. Dematerialized accounts stood at 36 lakhs in October 2021.
Roop Bhutra, CEO (of Investment Services), Anand Rathi Shares and Stock Brokers, said that the current calendar year saw a downward trend along with an increase in new Demat accounts due to global factors and poor performance in the broader market.
Due to fewer IPOs in the market this year than in 2021, the number of Demat accounts has decreased in recent times. Nitin Aggarwal, VP, of Motilal Oswal Financial Services, said the number of Demat accounts has declined since January due to market volatility following the Russia-Ukraine war.
He further added that global factors were affected due to the ever-increasing inflation and increase in interest rates. Due to such uncertainties, there was less customer orientation by brokers in this phase. The reason for the decline in Demat accounts in October could also be that the stock market was open for only 18 days during October 2022 due to festivals, while the stock market remained open for 22 days during the month of September.
However, in the long run, momentum will be seen again due to strength in the equity market. The number of Demat accounts increased to 10.4 crores in October 2022 which was 7.4 crore registered during October last year. In which an increase of 41 percent was seen.
Demat accounts increased with smartphone usage
The main reasons behind the growth in Demat accounts year-on-year are increasing smartphone usage, ease of digital switching, and attractive returns in the equity market over the last few years. Moreover, the corona epidemic has also taught people to rethink their spending and change their investment habits. On a month-on-month basis, the number of Demat accounts registered a mere 2 percent increase to 10.3 crores in September.
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