Retail Investors Dominate Stock Markets With Rising Demat Openings
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India’s stock market is seeing a shift in recent years, as retail investors continue to drive Demat account growth. FY24–25 was a breakout year for demat account additions in India (~4.1 crore new accounts; ~27% YoY growth), lifting total accounts to ~19.24 crore by March 2025 and above 20 crore by August 2025. Young investors from Tier-2 and Tier-3 cities are leading this shift, supported by digital platforms and simplified onboarding. This expansion is deepening participation and changing market dynamics. These investors now account for over half of daily trades, showing their rising influence.
What is a Demat Account
A Demat account, short for dematerialised account, allows investors to hold shares and securities in electronic form. It eliminates the need for physical share certificates and enables seamless buying, selling, and holding of equities.
A Demat account is mandatory for trading in equities, subscribing to IPOs, and holding securities in electronic form. Their ease of use has been instrumental in attracting new investors.
How to Open a Demat Account
To Open a demat account online you can follow the below mentioned process:
- Choose a depository participant (bank, broker, or financial platform).
- Fill out the application form and complete KYC with identity and address proofs.
- Link your PAN and bank account for transactions.
- Once verified, your account will be activated, and login details will be shared.
Rise in Demat Account Openings in India
Demat accounts in India have experienced growth in the following manner:
- India had ~4 crore Demat Account holders in 2020. By mid-2025, the number crossed 20 crore, showing 5X growth in a short span.
- Total demat accounts in India increased from ~15.14 crore in FY23-24 to ~19.24 crore in FY24–25, a ~4.1 crore absolute increase and ~27.1% YoY growth.
- Total demat accounts in India as of Sep 2025 was ~20.2 crores indicating slower growth as compared with previous year with market volatility and muted returns cited as causes.
This surge in recent years highlights how stock market participation is no longer confined to seasoned investors but has become a mass movement.
Factors Driving the Surge in Retail Participation
Several factors have contributed to the rapid increase in investor activity in recent years:
Technological Advancements
Mobile trading apps and digital platforms have made Demat Account opening faster and easier. Reduced costs and user-friendly interfaces lowered barriers for small investors.
Regulatory Support
SEBI and exchanges simplified KYC requirements and improved processes such as IPO allotments. This increased investor confidence and widened market access.
Rise of IPOs and Market Buzz
High-profile listings, especially from technology-driven firms, created excitement. Strong subscription in several IPOs encouraged more investors to enter the market.
Growing Financial Literacy
Awareness campaigns by regulators, brokers, and educational platforms have promoted equity investing. This shift has positioned equities as a recognised option for savings and investment, alongside traditional instruments such as gold and fixed deposits.
Impact of Retail Investors on Stock Markets
The sharp rise in participation has reshaped the way India’s equity markets function:
Higher Trading Volumes
Retail investors now account for more than half of daily trades on NSE and BSE. Their activity has pushed volumes to record highs.
Influence on IPOs
Investor demand has become a key driver of new IPO subscriptions. In several cases, the retail category has been oversubscribed within hours of opening.
Shift in Market Behaviour
Frequent trading by investors has increased short-term market swings. This behaviour often amplifies momentum-driven rallies and corrections.
Rise of Direct Equity Investing
Earlier, small investors preferred mutual funds. Today, many investors directly participate in equities using Demat Account platforms, reflecting a clear behavioural shift.
Retail vs Institutional Participation
Institutional investors such as FIIs and DIIs continue to drive large capital flows, but retail investors are increasingly balancing this dominance. They drive IPO oversubscriptions and support small-/mid-cap trading and liquidity.
Opportunities Created by Retail Participation
Investor participation creates the following opportunities:
- Greater liquidity in capital markets
- Broader ownership of listed companies
- Increased market depth, making markets more resilient
- Empowerment of individuals in wealth creation
Challenges of Rising Retail Participation
Investors may face the following obstacles:
- Lack of investment discipline leading to speculative trading
- Vulnerability to misinformation and market rumours
- Limited understanding of valuation and long-term investing
- Herd behaviour that amplifies volatility
Retail Investors vs Institutional Investors
This comparison shows how these investors complement institutional participation in shaping Indian stock markets.
| Aspect | Retail Investors | Institutional Investors |
| Investment Horizon | Short to medium-term | Long-term, strategic |
| Capital Strength | Limited individual capital | Large pooled resources |
| Market Impact | Drives IPO subscriptions, mid-cap rally | Influences large-cap movements |
| Risk Appetite | Often higher and momentum-driven | Balanced with research-based approach |
Conclusion
The surge in Demat Account openings shows how retail investors are reshaping India’s markets. Their rise signals broader access and lasting market change.
Disclaimer: No Business Standard Journalist was involved in creation of this content
Topics : Rising Demat Openings
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First Published: Nov 04 2025 | 12:13 PM IST
