Over 3 million demat accounts opened in Sept for second consecutive month

In September, over 3 million dematerialised (demat) accounts were opened for the second consecutive month, underscoring the continued allure of the domestic equity market for direct investors.

During this period, both the S&P BSE Sensex and the National Stock Exchange (NSE) Nifty surpassed their all-time highs set in December 2022, and a record number of initial public offerings (IPOs) were launched. These factors bolstered growth in demat accounts, essential for holding shares, bonds, and other securities in electronic format.

The country’s two depository firms, Central Depository Services and the National Securities Depository, added about 3.1 million new accounts. While the previous month saw a slightly higher number of additions, this figure marked the highest since January 2022.

With almost 6.2 million accounts added, the total demat accounts have nearly reached 130 million, constituting approximately 10 per cent of the country’s population.

It is important to note, however, that this figure does not represent the total number of unique investors, as an individual can open multiple demat accounts.

Last month, the NSE announced that the total number of unique investors directly participating in the stock market had surpassed 80 million.

Nithin Kamath, founder and chief executive officer of Zerodha, mentioned that the bulk of the 80 million unique investor additions have occurred in the past three/four years.

“NSE just announced that there are 150 million investors registered, of which 80 million are unique. Much of this growth has come in the past three/four years. The pace of financialisation is crazy, and this is in no small part thanks to the exchanges, especially NSE. This is vital for India to grow…,” he posted on X (formerly Twitter).

The sharp gains in the broader markets have buoyed the sentiment of small investors, according to industry experts.

The Nifty Midcap 100 and Nifty Smallcap 100 indices rose by 3.6 per cent and 4.1 per cent, respectively, outperforming the benchmark Nifty, which increased by 2 per cent.

In August, the Nifty had experienced a 2.5 per cent decline, even as the Nifty Smallcap 100 jumped by nearly 5 per cent.

Prakarsh Gagdani, whole-time director and chief business officer of 5Paisa, commented, “Indices reached new highs in September, and the small and midcap sectors continued to perform well. Existing investors had the opportunity to exit their old positions and establish new ones.”

A recent gush in IPOs has been an investor lodestone. In September, 14 IPOs lifted off, raising ~11,881 crore. This marked the highest number of IPOs since September 2010.

Given the recent listing-day gains, investor sentiment towards IPOs has become more favourable. Many existing investors are opening new accounts for their family members to increase their chances of securing IPO allotments.

“After a long time, we had a huge number of IPOs coming in a single month. There was a 20–25 per cent increase in demat accounts opened with us in a single month, and many of these accounts were opened a few days before IPOs,” observed Gagdani.

The relaunch of new derivatives contracts, featuring reduced lot sizes and new expiry cycles, has also enticed new investors.

Analysts believe that spreading derivatives expiry across the week will boost trading activity.

In September, both the cash and equity segments hit a record-high average daily turnover.