Demat account additions exceed 2 million

Demat account openings scaled its peak so far in 2023 with the addition of 2.1 million accounts in May. This was a significant milestone as it had been three months since over 2 million accounts were added last. Analysts attribute this surge in demat account openings to the renewed participation of retail investors in the Indian equity markets, encouraged by appealing returns witnessed over the past two months.

The number of demat accounts surpassed 118.16 million, reflecting a 1.8 percent increase from the previous month, and a substantial 25 percent growth over the same period last year. April experienced a dip in demat account openings, hitting the lowest level since December 2020, with only 1.60 million accounts opened due to volatile markets.

Historical data also shows a direct correlation between the trend of demat account openings and the performance of both the secondary and primary (IPO) markets.

Following a period of sluggishness influenced by global sentiments, the Indian markets experienced a revival in optimism. In April 2023, the market outperformed the global market by 4 percent, and this positive trend continued into May, with the market outperforming by 3 percent. Analysts point to the Reserve Bank of India’s stance on the interest rate scenario as a catalyst for this trajectory, providing further impetus to market growth.

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