New demat accounts that were opened in June stood at 1.79 million — the lowest since February 2021, reported Business Standard.
Equities dropping to their 13-month lows and small- and mid-cap stocks getting hammered have taken the sheen off stock-market investing, particularly among individual investors.
New demat account openings have been moderating after hitting 3.5 million in October 2021, when the benchmark indices made their lifetime highs. Since then, markets have made feeble attempts at recovery, but the trend has largely been downward on headwinds like monetary tightening, Russia-Ukraine war, and rising commodity prices, among others Trading volumes have slackened as well, the report said.
The total demat count now stands at 96.5 million, with 16 million new accounts getting added during the first half of 2022 — higher than 12.4 million added in the first half of 2021.
During the second half of 2021, a staggering 18.5 million new accounts got added, reveals the Securities and Exchange Board of India data. However, a major chunk of these accounts is no longer trading actively, with dismal initial public offering (IPO) markets and fall in stock prices hampering the sentiment, it said.
“The retail sentiment has been affected as the rises after the October 2021 sell-off have been short-lived and are getting sold into, mainly by overseas investors. The small- and mid-cap space is where most retail investors have exposure to. Retail investors are also enduring the pain of losses in most IPO allotments this year and the preceding one,” Deepak Jasani, head-retail research, HDFC Securities told BS.
In June, the Nifty Midcap 100 and the Nifty Smallcap 100 were down 25 per cent and 35 per cent, respectively, from their record highs. These indices have seen recovery since but are still sharply lower from the peak.
Brokers say such volatile conditions are discouraging investors. The demat account opening tally and trading volumes might moderate further unless the market sees strong revival, add experts.