This marks an average addition of 4 million accounts per month since the beginning of 2024 | File image
The number of dematerialised (demat) accounts—used for holding shares and other securities electronically—rose by 4.2 million in August, reaching a total of 171.1 million.
This marks an average addition of 4 million accounts per month since the beginning of 2024.
The demat tally was also boosted by record initial public offerings (IPOs) in August. Last month, 10 companies raised around Rs 17,000 crore via IPOs, the most in 27 months. So far this calendar year, over 50 companies have raised Rs 53,419 crore until August 31.
A recent study by market regulator Sebi showed a significant number of investors are opening demat accounts primarily to participate in IPOs.
Almost half of the total allotted demat accounts that applied for IPOs between April 2021 and December 2023 were opened in the post-Covid period, the study showed.
It is also observed that existing investors open fresh demat accounts for family members to increase their chances of securing IPO allotments.
During the first eight months of 2024, nearly 32 million demat accounts have been added. Despite market turbulence and headwinds, including hikes in capital market taxes and concerns about a US recession, the stock market continues to attract new investors. Market players view the steady pace of demat additions as a positive sign for market stability. The incremental flows from these new investors will help offset potential outflows from overseas funds or existing investors and help keep volatility under check, they said.
The trend also suggests a growing channeling of household savings into equities. According to a Sebi working paper, domestic household investments in equities stood at Rs 128 trillion in FY24, up from Rs 84 trillion in FY23.
Digitisation and increased awareness about equity investing have made it easier to open accounts, contributing to the surge in demat accounts.
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First Published: Sep 05 2024 | 11:49 AM IST
