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19 Nov 2024
The number of dematerialised (demat) accounts, which are used for holding shares and other securities electronically, surged by 4.4 million in September 2024, bringing the total to 175.4 million. Since the start of the year, around 4 million accounts have been added monthly on average.
This growth was primarily driven by a wave of initial public offerings (IPOs) in September, during which 12 companies raised a total of Rs 11,058 crore. So far in 2024, over 62 companies have collectively raised Rs 64,511 crore through IPOs. Many investors open demat accounts specifically to increase their chances of receiving IPO allotments, with some even creating accounts for family members to boost their odds.
Market analysts see the continuous increase in demat accounts as a sign of market stability, suggesting that the influx of new investors can help counterbalance any potential withdrawals by foreign funds or existing investors, thereby keeping market volatility in check. The trend also points to a growing shift of household savings towards equity investments. According to a report from Sebi, domestic household investments in equities reached Rs 128 trillion in FY24, a significant increase from Rs 84 trillion in FY23.
Despite market fluctuations and regulatory changes, new account openings continue at a strong pace. However, it remains uncertain how upcoming changes, such as higher capital gains taxes and an increase in the securities transaction tax, along with stricter rules for derivatives trading, will affect retail participation. Additionally, a recent Rs 40,000 crore outflow from foreign investors, which led to a 5% drop in key indices, may also influence market sentiment moving forward.
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