Demat accounts up by 41% in October, incremental additions dropping: Report

As per PTI reports, incremental additions of demat accounts have been continuously declining since August with 26 lakh in numbers, followed by a further drop to 20 lakh in September, and 18 lakh in October 2022.

In October 2021, the incremental addition in dematerialized (demat) accounts was 36 lakh.

The analysis by Motilal Oswal Financial Services also stated the primary reason for the declining trend in additions of new demat accounts, as per PTI reports. 

Roop Bhootra, CEO Investment Services, Anand Rathi Shares and Stock Brokers said, “The primary reason is the market volatility seen in the current calendar year due to global factors and relative under-performance of broader markets compared to frontline indices.”

He added that a lesser number of new initial public offerings (IPOs) hitting markets this year compared to 2021 has also contributed to the lower number of Demat accounts being opened in the last few months, PTI reported.

Nitin Aggarwal, Senior Group VP, Research-Banking & Insurance, Institutional Equities, Motilal Oswal Financial Services, said since January, additions have been slowing down as the market volatility increased post the Russia-Ukraine conflict. 

It is important to mention that the decline in incremental addition in October month could also be due to the festive season as there were effectively only 18 working days in October 2022 as compared to 22 working days in September. 

However, Aggarwal believes that the momentum will come back along with the strength in equity markets in the longer term given the deep under-penetration.

On a month-on-month basis, the number of demat accounts grew by just 2 percent during the month under review from 10.3 crores in September.

(With PTI inputs)