Demat accounts rise 34% to 10.8 cr in December on these multiple factors - here's what analysts say

On the back of attractive returns from the equity markets, ease of account opening process and increased financial savings, the number of demat accounts rose to 10.8 crore in December 2022, a surge of 34 per cent on a year-on-year basis.

Also, the incremental account additions of such accounts were higher in December in comparison with the preceding three months, however, it was below the financial year 2021-22 (FY22) average run-rate of 29 lakh.

According to an analysis by Motilal Oswal Financial Services, the incremental additions of such accounts were 21 lakh in December 2022, compared to 18 lakh each in October and November and 20 lakh in September.

This decline is mainly due to volatility seen in 2023 on account of Russia-Ukraine war, high-interest rate environment and rising inflation and hawkish US Federal Reserve policies, Nistasha Shankar- Head PRS Equity Research, Yes Securities, said.

Also Read: Market Next Week: HUL, Asian Paints results, wholesale inflation data, macro data from developed economies among top cues for Street

Also, a lesser number of new initial public offerings (IPOs) hitting markets in 2022 compared to 2021 has also contributed to a lower number of demat accounts being opened in the last few months, Roop Bhootra, CEO, Investment Services, Anand Rathi Shares and Stock Brokers, said.

As per the data, the number of demat accounts rose to 10.8 crores in December 2022 from 8.1 crores in December 2021, registering a growth of 34 per cent.

The addition in dematerialised (demat) accounts in the last year was driven by attractive returns from the equity markets and the ease of account opening process offered by brokers to their clients.

Also, the increased financial savings, financial literacy and the growing popularity of trading amongst youths have been some other major factors contributing to the rise, Yes Securities' Shankar said.

While the number of demat accounts continues to rise, although, at a slower pace, the count of NSE active clients has been falling for six consecutive months. The active user clients in the industry as a whole rose 12 per cent year-on-year basis, but fell 1 per cent month-on-month to 3.5 crores in December 2022.

Also Read: Here's why foreign investors have dumped shares worth Rs 15,000 crore this month so far

"With heightened volatility in the markets, customers who entered during the 2HFY22 in the phase of a booming IPO market seem to be reducing their trading activities. However, if we consider the retail F&O average daily turnover, it is higher by 26 per cent MoM as the options segment continues to attract new customers," Nitin Aggarwal - Head of Banking, Insurance & Financials Research-Motilal Oswal Institutional Equities, said.

At present, the top five discount brokers -- Zerodha, Angel One, Groww, ICICI Securities and IIFL Securities -- account for 59.3 per cent of overall NSE active clients, up from 56.2 per cent in December 2021. 

With PTI Inputs