The Hindu Business Line : Huge rush to convert shares into demat

A clear signal of this is seen in the conversion of large number of physical shares into demat form. This is being done, as physical shares cannot be sold in the open market.

Several broking firms that are also depository participants (DPs) said that there has been huge rush from investors to get the shares in demat form in order to sell them in the market. Even officials of depositories -

National Securities Depository Ltd (NSDL) and Central Depository Services (India) Ltd (CDSL) - confirmed that there has been increase in the demat request (conversion of physical paper into dematerialised form) in the last few months. There has also been increase in the active demat account, officials at both the depositories said.

Officials of several DPs, catering to retail investors, said the number of demat request has increased five folds since September last year. An official of a small broking firm said "the demat request in our office has increased from 25 (certificates) per week in the beginning of this year to 125-150 requests after Diwali".

He said the rush for demat request is mainly to sell the shares in the market.

Most of the investors that are converting the shares into demat form are those that entered the stock market during 1992 boom periods.

However, crash of the market after the 1992 scam left them with just pieces of paper as the stock price of these companies slumped. However, in the current rise in the stock market, stock price of large number of companies (both small and big) are trading at their all-time high levels, in many cases higher than the 1992 boom and investors are just cashing on the rise.