The top five discount brokers were impacted as the number of demat accounts opened with them weakened in April. A recent report by brokerage house Motilal Oswal highlighted that additions of new demat accounts continued to decline in April. The incremental number of new accounts added declined 18 percent on a monthly basis to 16 lakh in April as against 19 lakh in March, the report observed. Meanwhile, 21 lakh accounts were added in February.
This figure is significantly lower than the average number of new accounts added per month in FY23, which is 21 lakh, it further highlighted. MOSL also mentioned that the total number of demat accounts stood at 11.6 crore in April 2023.
NSE clients also decline
Demat account additions had picked up post the pandemic, but as markets turned erratic and FII enthusiasm waned, an impact on the sentiment of retail investors was visible. MOSL also pointed out that the intensity of the fall was higher at 15 lakh accounts in April 2023 versus 9 lakh in March 2023.
Also, as per the report, the total number of active user clients at NSE declined sequentially for the tenth consecutive month by 16.3 percent YoY, and by 4.6 percent MoM to 3.12 crore in April 2023.
Discount brokers impacted
The decline in demat additions as well as in NSE active accounts impacted the top 5 discount brokers heavily. According to the report, the top five discount brokers - Zerodha, Upstox, Angel One, Groww, and 5Paisa Capital - account for over 60 percent of the market share of active clients, which was earlier being held by traditional brokerage houses.
However, the cautious investor sentiment amid market volatility was also reflected in the reduction of clients for these discounted brokers. All top 5 discount brokers reported a decline in clients, however, despite that, Zerodha, Angel One, and Groww reported a rise in their market share.
MOSL also looks at the performance of key discount brokers in April:
- Zerodha reported a 1.6 percent MoM decline in its client count to 63 lakh, with a 62 bps rise in market share to 20.2 percent.
- ANGELONE reported a 0.3 percent MoM decline in its client count to 43 lakh, with a 58 bps rise in market share to 13.7 percent.
- Upstox reported a 23.1 percent MoM decline in its client count to 22 lakh, with a 171 bps dip in market share to 7.1 percent.
- Groww reported a 0.5 percent MoM decline in its client count to 53 lakh, with a 70 bps rise in market share to 17.2 percent.
- 5Paisa Capital reported a 5.6 percent MoM decline in its client counts to 6 lakh, with a 2 bps dip in market share to 2 percent.
Meanwhile, let's also look at the performance of some traditional brokers:
- ICICI Securities reported a 4 percent MoM decline in its client counts to 22 lakh, with a 4bp increase in market share to 7.2 percent.
- IIFL Securities reported a 3.5 percent MoM decline in its client counts to 5 lakh, with a 2 bps marginal increase in market share to 1.5 percent.
