NEW DELHI: With increased participation of first-time retail investors post the onset of covid-19 pandemic in March 2020, the number of demat accounts crossed 10 crore mark for the first time in August 2022.
This is a jump of more than two times given the total number of demat accounts stood at 4.09 crore in March 2020, the month of covid-19 outbreak, according to data released by depository firms National Securities Depository Limited (NDSL) and Central Depository Services (CDSL).
Among the two depositories, CDSL had 7.16 crore demat accounts, while NSDL had 2.89 crore demat accounts as of August 31. However NSDL, which is dominated by institutional investors, had AUC (assets under custody) of Rs 320 lakh crore compared to just Rs 38.50 lakh crore in case of CDSL.
“While we witnessed a substantial increase in demat accounts in the past two years, it is equally important to note that NSDL’s custody value increased from Rs 174 lakh crore in April 2020 to Rs 306 Lakh crore (4 trillion $) in July 2022, which indicates participation from both retail and institutional investors,” said Prashant Vagal, executive vice-president at NSDL.
There is not one but several factors that have triggered the surge in new demat accounts. However, none is as important as millions of millennials entering the equity market via zero brokerage trading platforms where opening a demat account is as easy as it gets.
Then the poor returns given by debt and other asset classes, which most times fail to beat inflation rate, pushed investors to go for equities. The IPO mania of 2021 and a couple of strong rallies in the past two year brought a large number of fresh investors.
According to some estimates, the share of retail investors in companies listed on the NSE reached an all-time high of 7.42%, valued at Rs 19.2 lakh crore, in March 2022.