The Hindu Business Line : Bears keep new demat accounts away

Mumbai, July 20 As equity markets remain in a bear grip, the number of new investors coming to the bourses appears to be dwindling. This is evident from the figures for fresh demat accounts opened with the two depositories in the past three months.

The number of new accounts increased by 6.5 per cent in the quarter ended June, against 24.78 per cent in the quarter ended March.

According to figures obtained from National Securities Depository Ltd and Central Depository Services Ltd, the two together had 8.11 lakh new accounts in the June quarter, against 24.71 lakh accounts in the March quarter.

The number of new accounts registered in the first half of July is just 1.04 lakh, an increase of less than one per cent over the June base. As at end-June, there were 132.52 lakh demat accounts, according to data put out by NSDL and CDSL.

The Reliance Power initial public offer of January saw a huge number of new investors enter the market, and this was reflected in the March quarter numbers, said an official from one of the depositories.

Typically there is a spurt in new registrations a few weeks ahead of high-profile IPOs. There were 29 IPOs in the past two quarters of which three were withdrawn.

Parallel movement

The Sensex was in the 15,000 range during September 2007.

The steady rise of the market since then also saw a parallel rise in demat accounts, which registered a growth exceeding 14 per cent in the October-December 2007 quarter even as the Sensex rose by more than 17 per cent.

The January-March 2008 quarter saw the Sensex fall by more than 22 per cent, whereas the growth in the number of demat accounts was more than 24 per cent (largely due to the Reliance Power IPO).

“Retail investors enter the market only when the markets go up, and this is very typical of retail behaviour the world over,” said an official from another depository.