A record number of 3 million new demat accounts were opened in July 2023, indicating the growing retail participation in the stock market.
According to data from the two depositories, CDSL and NSDL, this is the highest since January 2022 and about 50 per cent more than the previous 12-month average of 2 million. The total number of demat accounts now stands at a new high of 123.50 million, according to data.
Of late, outperformance of the Nifty and Sensex by small-cap indices have piqued the interest of retail investors in the equity market.
According to experts, the recent boom in market performance, with the Sensex and the Nifty reaching new highs has led to this spurt in new demat account opening.
“The influx of funds from foreign institutional investors and domestic institutional investors along with vibrant IPOs boosted the stock market’s allure, enticing more investors to open demat accounts,” Moneycontrol quoted Arvinder Singh Nanda, senior vice-president of Master Capital Services as saying.
Reasons Behind Upbeat Market Sentiment
According to analysts, there are many reasons for the spurt in interest in the equity market and the consequent increase in the number of new demat accounts.
Though there has been periods of market correction and it will continue in future, the overall sentiment is buoyant, at present. Economic growth and renewed infrastructure and real estate development will spurt more participation in the market in future.
Second, there is now increasing awareness about the long-term benefits of equity investing, which will only lead to increased retail participation in equities, either through stocks or mutual funds. Lastly, the growing population of youngsters and millennials and the rise in disposal income with greater emphasis on wealth creation through market will lead to a continuous and growing interest in equity investment, they say.
Retail Participation In MF Also On Rise
Incidentally, retail participation in mutual funds has also been on the rise, according to data from the Association of Mutual Funds in India (Amfi).
The mutual fund industry’s net asset under management (AUM) increased to Rs 44.39 lakh crore in June 2023 from Rs 43.20 lakh crore the previous month.
The total retail mutual fund folios covering equity, hybrid and solution-oriented schemes reached 119.06 million in June 2023, compared to 117.63 million in May 2023. Retail AUM comprising equity, hybrid, and solution-oriented schemes stood at Rs 23.09 lakh crore in June, with an average AUM of Rs 22.73 lakh crore.