Demat accounts rise 26% to 12.97 crore in Sept as local equities pay off

Last month, foreign investors exited Indian markets amid a surge in crude oil prices.

The number of demat accounts increased to 12.97 crore in September, a surge of 26 percent on a yearly basis, primarily on the back of attractive returns from local equities.

Over 30.6 lakh demat accounts were opened during the month, slightly down from 31 lakh in August, according to data from NSDL and CDSL. This marks the second consecutive month with incremental additions surpassing 30 lakh.

The addition of demat accounts in September can be attributed to the buoyancy in the market, especially in the broader markets. Also a lot of IPOs since July got listed at a good premium. This may have lured a host of investors into the markets, analysts said.

Also brokerages, including discount brokers, running regular account acquisition campaigns may have boosted the rise in demat accounts, analysts said.

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September marked the highest number of IPOs in 13 years, with 14 companies going public, the most since September 2010, with a cumulative collection of around Rs 11,800 crore, the highest since May 2022, when eight issues raised Rs 29,511 crore.

In the SME IPOs, a record-breaking surge saw 37 firms opting to get listed, raising over Rs 1,000 crore. This marks the highest number since SMEs hit Dalal Street back in 2012.

According to VK Vijaykumar, chief investment strategist, Geojit Financial Services, the rise in demat accounts since Covid reflects a lasting trend, driven by the youth's preference for equities. Despite volatility, the attractive post-Covid equity returns continue to draw in young investors, who see market dips as buying chances. However, the situation could turn negative if a major crash leads to heavy losses for many new investors.

Last month, foreign investors exited Indian markets amid a surge in crude oil prices. Globally, equities declined with the dollar hitting over 107 mark and the US 10-year yield scaling a 16-year high on expectations of higher interest rates to stay elevated longer than expected.

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In September, the benchmark Sensex and Nifty gained 1.54 percent and 2 percent, while BSE MidCap and SmallCap indices jumped 3.7 percent and 1.1 percent. Foreign investors sold around $2.19 billion in local equities during the month.

Deepak Jasani, head of retail research at HDFC Securities, said that with the upcoming September earnings and elections, expect market volatility and occasional opportunities in both primary and secondary markets. "While we foresee consistent monthly demat account additions, surpassing recent numbers in the short term could be a challenge," he said.