Demat Accounts Rise 34% To 10.8 Crore In December On Attractive Returns From Equity Markets

The number of demat accounts rose to 10.8 crore in December 2022, a surge of 34% on a yearly basis, due to attractive returns from the equity markets, the ease of the account opening process, and increased financial savings.

Also, the incremental account additions of such accounts were higher in December in comparison with the preceding three months but below the financial year 2021–22 average run rate of 29 lakh.

The incremental additions to such accounts were 21 lakh in December 2022, compared to 18 lakh each in October and November and 20 lakh in September, according to an analysis by Motilal Oswal Financial Services.

This decline is mainly due to volatility seen in 2023 on account of the Russia-Ukraine war, a high-interest rate environment, rising inflation, and hawkish U.S. Federal Reserve policies, Nistasha Shankar, head of PRS Equity Research at Yes Securities, said.

Also, a lesser number of new initial public offerings hitting markets in 2022 compared to 2021 has also contributed to a lower number of demat accounts being opened in the last few months, Roop Bhootra, CEO of investment services at Anand Rathi Shares and Stock Brokers, said.

As per the data, the number of demat accounts rose to 10.8 crore in December 2022 from 8.1 crore in December 2021, registering a growth of 34%.

The addition of dematerialised accounts in the last year was driven by attractive returns from the equity markets and the ease of the account opening process offered by brokers to their clients.

Also, the increased financial savings, financial literacy, and growing popularity of trading amongst youths have been some other major factors contributing to the rise, Yes Securities’ Shankar said.

While the number of demat accounts continues to rise, although at a slower pace. The count of NSE active clients has been falling for six consecutive months. The active user clients in the industry as a whole rose 12% year-on-year basis, but fell 1% month-on-month to 3.5 crores in December 2022.

“With heightened volatility in the markets, customers who entered during 2HFY22 in the phase of a booming IPO market seem to be reducing their trading activities. However, if we consider the retail F&O average daily turnover, it is higher by 26% MoM as the options segment continues to attract new customers,” Nitin Aggarwal, head of banking, insurance, and financials research at Motilal Oswal Institutional Equities, said.

At present, the top five discount brokers—Zerodha, Angel One, Groww, ICICI Securities, and IIFL Securities—account for 59.3% of overall NSE active clients, up from 56.2% in December 2021.