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India's total dematerialised, or demat accounts - necessary for holding shares and securities in electronic form - have surpassed the 17 crore mark for the first time in August, according to latest numbers from depositories.
A total of 42.3 lakh new demat accounts were opened in August - a month that saw heightened stock market volatility - pushing the total to 17.11 crore. Data from the depositories shows that the addition was marginally lower than July's 44.44 lakh demat accounts, but was significantly higher to the addition of 31 lakh in August 2023.
Interestingly, India's total demat accounts are now ninth in rank, when stacked against world's most populous countries, ie, the total demat count exceeds populations of countries like Russia, Ethiopia, Mexico, and Japan. This figure is close to that of Bangladesh's population.
The milestone has been reached just two months after the count had hit 16 crore. Since January 2023, more than 6 crore new demat accounts have been added, reflecting a growing appetite for equity investing among Indian households.
August also marks the sixth instance of monthly demat additions exceeding the 40 lakh figure. Previously, this milestone was achieved in December 2023, followed by January-February and June-July this year.
So far in 2024, nearly 3.18 crore fresh demat accounts have been opened, surpassing the total additions of 3.10 crore in 2023.
A section of analysts say many investors and traders tend to open demat accounts as markets rise, and participation increases. Other factors driving the growth include the ease of completing KYC online, possibility of switching brokers digitally, increased awareness, and investors running multiple accounts.
Kranthi Bathini, Director - Equity at WealthMills Securities, said that India is currently seeing a financialisation of assets, with equity awareness growing rapidly. The stock market still has a strong long-term growth potential, compared to other asset classes, he said. Investors are acting in a matured manner and focusing on long-term prospects, while also looking to capitalise on the short-term trend, he added. Overall, more investors are entering the stock market with a longer term perspective rather than a short one.
The strong returns from domestic markets since last year too also led to a steady influx of new investors. However, many analysts are now talking about rising valuations. Since January 2023 till date, India's benchmarks Sensex and Nifty have surged 35 percent and 39 percent respectively, while border BSE Mid and Smallcap indices have risen 94 percent each.
While there may be pockets of overvaluation, Bathini says every bull run presents opportunities, and it is crucial to seize them. In India, equities are under owned, with a relatively low percentage in individual portfolios, and it is this under-ownership that is driving more people to enter the stock market.
Nilesh Sharma, Executive Director and President of SAMCO Securities too said that while there may be pockets of over-valuation, Indian markets have shown consistent growth and remain stable compared to global peers.
