Equity culture gains traction: Record demat accounts opened in January

At the time when investors are pulling out money from equity mutual funds, direct investment in the stock market has been gaining traction, which is visible from the record opening of demat accounts in January.

Nithin Kamath, co-founder, Zerodha revealed that some 17 lakh demat accounts were added in January. “How big was Jan 2021 for the broking industry? The best year for the markets since 2010 was by far 2014. Nifty was up more than 30% and the industry added 13 lakh new Demat accounts in 1 year. And, Jan 2021, just in 1 month 17 lakh new Demat accounts were added,” he tweeted

Of late, equity mutual funds witnessed an outflow of Rs 9,253 crore in January, making it the seventh consecutive monthly withdrawal. On the other hand, data shows that some 13 lakh new demat accounts were opened in December and 9 lakh in November.

The figure stood at 13 lakh, 9 lakh and 7 lakh in September, July and May, respectively. According to media reports, the total demat account reached 5.12 crore in January 2021 against 4.09 crore in March 2020.

The number of active demat accounts have also reached 62 lakh in FY21 against 20 lakh in FY20 and just 5 lakh in FY19. Active accounts are those who have traded at least once in the last one year.

With the entry of new participants in the market, Central Depository Services Limited (CDSL) has recently become India’s first and only listed depository to open three crore plus active demat accounts. CDSL is currently the largest depository in the country in terms of active demat accounts.

BV Chaubal, Chairman, CDSL said, “The focus of registration of new demat accounts is shifting from metros to tier II and tier III cities, which is indicative of the deepening and widening of the Indian Capital Market. In the 21st century, riding on financial technology, this crisis has brought an opportunity to accelerate digital innovations.”