Record 4.2 mn demat accounts opened in Dec 2023, total touches 139 million

New account additions surged to 4.2 million in Dec 2023 vs. average monthly additions of 2.1 million in FY23.

The total number of demat accounts increased to 139 million in December 2023 while new account additions surged to 4.2 million in the last month of the year, as per data analysed by brokerage Motilal Oswal.  The average monthly additions has been around  2.1 million in FY23. 

This surge is a 50 per cent increase compared to the previous month, which witnessed 2.8 million new demat accounts.

"Opening of this record 42 lakh demat accounts is due to fear of missing out (FOMO) factor. The market is trading at a record high and investors have made significant profit as the rally is broadbased. New investors are coming in by hearing the noise around to participate in the rising market. Buoyancy in the IPO market is also prompting these investors to open demat accounts to participate in these IPOs," said Mukesh Kochar, National Head Wealth, AUM Capital. 

 

However, Kochar cautioned investors that they should avoid investing in penny stocks based on rumours and should stay invested for long and be consistent with their SIPs. ' Market is at a lifetime high and volatility may increase from hereon," he said. 

"The surge in new demat account openings is directly correlated with the short-term bullish trend in the stock markets, particularly during periods of overall market prosperity. The recent state election results and the optimistic anticipation of rate cuts by the Federal Reserve have solidified retail investors' confidence in the sustained performance of the equity market. Consequently, there has been a notable uptick in the establishment of new demat accounts," said  Deepak Gagrani, Founder of Madhuban Finvest.

India ended the eventful CY23 on a high note, with the Nifty delivering 20% returns, marking the eighth consecutive year of a positive close. The expectations of the peaking of the rate hike cycle, moderating inflation, improving liquidity, and consistently rising retail participation in equities, along with strong corporate earnings, drove this performance.

The number of active clients at NSE increased 3.6  per cent month-on-month to 36.2 million in Dec’23. Currently, the top five discount brokers account for 62.1 per cent of total NSE active clients vs. 61.6 per cent in November 2023.

" Many small and mid-cap stocks have delivered multifold returns, and this phenomenon has attracted even more new-to-market investors that are keen on making the most of the market’s opportunities. The IPO market has also been strong with a slew of new IPOs hitting the market, which has also contributed to the demat account growth.  Historically there has always been a surge in new account openings in every bull market rally.  Finally, competitive brokerage rates and instant and easy onboarding processes by digital brokers have also fueled this spike in account openings," said Shruti Jain, CSO, Arihant Capital

Performance of key discount brokers:

1. Zerodha reported a marginal month-on-month (MoM) increase in its client count to 6.7 million, with market share declining by 30bp to 18.6%.
2. ANGELONE reported a 4.7 per cent MoM increase in its client count to 5.3 million, with a 20bp increase in market share to 14.8%.
3. Upstox reported a 2.5% MoM increase in its client count to 2.3 million, with a marginal decline in market share to 6.3%.
4. Groww reported a 7.2 per cent MoM increase in its client count to 7.6 million, with a rise in market share to 21%.

Performance of key traditional brokers:

1. ISEC reported a 0.4% MoM decline in its client count to 1.9 million, with a decline in market share to 5.2%.
2. IIFL Sec reported a 0.5 per cent MoM increase in its client count to 0.4 million, with a decline in market share to 1.1%.

"The current market context looks ideal with all factors viz. macro, earnings, rates, liquidity, inflation, policy momentum looking picture perfect. This is off-course ably complimented by flows. We remain firm believers in the medium- term India story and expect these trends to strengthen with multiple themes at play (financialization of savings, private capex revival, rising discretionary consumption, strengthening of real estate cycle, and the massive creation of digital and physical infrastructure). That being said, we believe the journey will not be linear and will be interspersed with regular bouts of volatility as valuations are full, and any adverse change in the current benign liquidity backdrop or geopolitical situation can result in episodes of sharp corrections," said Motilal Oswal in a note.