Demat account growth slows to 23-month low amid market volatility

Demat Account Growth Slows to 23-Month Low Amid Market Volatility

The momentum in new demat account openings continued to decelerate in March, marking the slowest pace of additions in 23 months. Despite a steady rise in the total number of demat accounts, data from depositories indicates a notable slowdown in new registrations.

In March, 2.04 million new accounts were opened—the lowest growth since April 2023—compared to 3.03 million in February. This also marks the third consecutive month of declining new account openings. As of the end of March, the total number of demat accounts with NSDL and CDSL stood at 192.44 million, up from 190.4 million in February.

Market experts attribute this slowdown to prevailing weak investor sentiment and a lackluster IPO market. When market conditions are unfavorable and IPO activity is subdued, retail investors tend to hold back from opening new accounts. Unless there is a revival in market confidence and an uptick in primary market activity, this trend is likely to persist.

March was marked by significant volatility in Indian equities. While the first half of the month saw heavy sell-offs, a partial recovery was observed in the latter half. Benchmark indices Sensex and Nifty registered gains of 5.8 percent and 6.3 percent respectively, whereas the BSE Midcap and BSE Smallcap indices declined by 7.6 percent and 8.3 percent.

Indian markets experiencing correction since late September, amid multiple headwinds—including disappointing corporate earnings, slower economic growth, tight liquidity, delayed government expenditure, and persistent inflationary pressures. These domestic challenges, combined with global uncertainties such as geopolitical tensions and trade disruptions, have significantly dented investor confidence.