Demat accounts rise 34% in December on attractive returns from equity markets

The number of demat accounts rose to 10.8 crore last month – a surge of 34% on yearly basis. The incremental additions stood at 21 lakh in December 2022, compared to 18 lakh each in October and November and 20 lakh in September. An analysis by Motilal Oswal Financial Services however indicates that this was below the FY22 average run-rate of 29 lakh.

According to Nistasha Shankar the Head PRS Equity Research, the decline can be attributed to volatility seen on account of the ongoing Ukraine-Russia war, high-interest rate environment and rising inflation, and hawkish US Federal Reserve policies.

There were also a lesser number of initial public offerings (IPOs) hitting markets in 2022 compared to the previous year.

But while the number of demat accounts in the country continues to rise – albeit at a slower pace – the count of NSE active clients has declined for six consecutive months. The active user clients in the industry as a whole rose 12% year-on-year basis, but fell 1% month-on-month to 3.5 crores in December 2022.

“With heightened volatility in the markets, customers who entered during the 2HFY22 in the phase of a booming IPO market seem to be reducing their trading activities. However, if we consider the retail F&O average daily turnover, it is higher by 26% MoM as the options segment continues to attract new customers,” said Nitin Aggarwal, the Head of Banking, Insurance & Financials Research for Motilal Oswal Institutional Equities.

(With inputs from agencies)