The momentum in the markets has been boosting new account openings at brokerages. According to a report by Business Standard, 21 lakh new dematerialised (demat) accounts were opened in May with the two depositories, CDSL and NSDL. The total count has hit a fresh high of 11.8 crore, said the report.
The report highlighted that the new additions in May were up 32 percent month-on-month (MoM), in line with the previous 12-month average of 20 lakh.
It is important to note that demat accounts are required for trading and holding shares in an electronic format.
The recent recovery in the Indian markets drove the rise in new demat accounts. In May, the benchmark Nifty gained 2.6 percent on the back of strong inflows from foreign portfolio investors (FPIs) and encouraging March quarter earnings. The Nifty Midcap 100 rose 6.2 percent, and the Nifty Smallcap 100 rose 5.1 percent. Meanwhile, FPIs bought shares worth ₹43,838 crore in May, the highest buying in nine months, highlighted the report.
Market experts told the market daily that a combination of gain in the mid-and small-cap segments and some excitement due to the initial public offering (IPO) of Mankind Pharma led to the uptick in the opening of new demat accounts.
"The lower number of working days in April was one of the reasons for the drop in numbers in April. In May, a bit of active trading returned because of the fewer holidays. Mid and small caps had a healthy up move in May. Account opening is correlated to the fortunes of mid and small-caps. April was a month of recovery after March markets had taken a beating. May we build on recovery and start showing some momentum. Moreover, every time a huge issue of a known brand comes, new accounts get opened for IPO applications," Jimeet Modi, founder and CEO of Samco, was quoted as saying in the report.
Officials at brokerages are saying they are once again witnessing a rise in retail participation and a rise in active clients, the report stated. In February, the share of individual investors in overall trading turnover had declined to a 34-month low, BS informed. In May, cash market turnover too had risen to an eight-month high, added the market daily.
