The Hindu Business Line : February sees big drop in new demat accounts

Mumbai, March 29 The market turmoil of the last two months has put brakes on new demat accounts. The number fell more than 50 per cent in February, compared to January.

January figures at Central Depository Services Ltd (CDSL) and National Securities Depository Ltd (NSDL) totalled 14.23 lakh accounts (against 5.46 lakh in December) — abnormally large on account of several IPOs, notably that of Reliance Power, that month. This figure got halved in February which saw only 6.19 lakh new active accounts. The March figure looks like it would be even less, with only 3.1 lakh accounts reported so far by CDSL and NSDL.

“With the Reliance Power issue heavily oversubscribed, many applications were rejected. So demat accounts were closed as people saw no point in continuing with them,” said Mr Rajnish Rangari, Country Head, Investment Banking-CMG, Karvy Investor Services Ltd. “Another reason is that there were no major public issues in February and March,” said Mr Rangari. Interestingly, during the recent market fall, several brokers squared off their clients’ position without the latter’s approval, said sub-broker Mr Sanjay Someshwar, Ventura Securities. The clients switched loyalties to other brokers, opening new accounts; but their older accounts are not yet closed. If these accounts were closed, the net new active accounts in February and March would number even less.

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