The number of dematerialised (demat) accounts — used for holding shares and other securities electronically — rose by 4.4 million in September, reaching a total of 175.4 million. It marks an average addition of 4 million accounts monthly since the beginning of 2024.
The demat tally was boosted by record initial public offerings (IPOs) in September. Last month, 12 companies raised Rs 11,058 crore via IPOs. And in this calendar year, more than 62 companies have raised Rs 64,511 crore. A significant number of investors open demat accounts primarily to participate in IPOs. Investors open fresh demat accounts for family members to increase their chances of securing IPO allotments.
Market experts view the steady pace of demat additions as a positive sign for market stability. The incremental flows from these new investors will help offset any potential outflows from overseas funds or existing investors and help keep volatility under check. The trend also suggests a growing channelisation of household savings into equities. According to a Sebi working paper, domestic household investments in equities stood at Rs 128 trillion in financial year (FY) 2024, up from 84 trillion in FY23.
The new additions are happening despite bouts of volatility and regulatory tightening around trading rules. It remains to be seen how the hike in capital gains taxes and also the securities transaction tax coupled with stricter trading criteria for the derivatives segment will impact retail participation. Also, the recent selloff — triggered by Rs 40,000 crore outflows by foreign investors— that has led to a 5 per cent drop in benchmark indices from their peak could also weigh on sentiment.
First Published: Oct 09 2024 | 6:43 PM IST
