On new investor additions, Maharashtra is No.1 again

UCCs are unique client identification numbers given by stock brokers to investors, which are mapped to their demat accounts. Analysts said more migrants to Maharashtra entering the capital markets, and a high base in UP may have combined to help the western state reclaim the top slot.

Gujarat saw the third highest addition of new investors at 230,000, Rajasthan 140,000 and West Bengal 120,000. The five states alone contributed 52% of new investor registrations across 25 top states.

The data applies only to the country’s largest stock exchange NSE, which enjoyed a 91.5% market share ( ₹20.79 trillion out of ₹22.72 trillion gross turnover) in the cash equity segment, with BSE a distant second. This makes NSE a proxy for developments in the capital markets.

“Maharashtra attracts the highest number of migrants among India’s states and many of these young working-age people must have accounted for the fresh registrations,” said Alok Churiwala, managing director of Churiwala Securities.

He attributed UP’s rise to “rising awareness” on equity investments among educated masses, especially in urban regions like Noida.

In February 2023, UP toppled Maharashtra as the state with highest new investor registrations.

The upsurge in market participation is borne out by the increase in cumulative demat accounts at depositories NSDL and CDSL since the pandemic. The number of client demat accounts, where securities are housed in electronic form, grew over threefold from 40.8 million at the end of FY20 to 143.9 million as of 31 January in the current fiscal year.

UP’s growth in investor base has been prolific, growing from just 2.3 million at the end of FY20 to 9.01 million by the end of December 2023.

In terms of total registered investors, Maharashtra leads with 17.5% or 15 million investors as of December 2023. UP overtook Gujarat in November 2022 to take the second spot and has held that position since; Gujarat is third at 7.7 million, and West Bengal and Karnataka are at 4.8 million each. These five states together accounted for 48.3% of the total investor base of 85.4 million as of December 2023, as per the NSE data.

“UP was under-penetrated, but after the pandemic, it has seen phenomenal growth in new UCCs,” said Uttam Bagri, promoter director, BCB Brokerage Pvt. Ltd. “We will see normalizing of growth in UCCs going forward, but there will be a keen contest for the top slot in terms of new additions.”

From a multi-year low of 7511.1 on 24 March 2020, the Nifty has risen 190% to 21782.5 as of 9 February, sparking massive domestic investor interest.