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After their record participation in the last two years, retail investor interest in stock market seems to be slowing down. From 34 lakh new Demat accounts in January, the monthly Demat account additions have been on a declining trend.
It touched 28 lakh in February and March, and further dropped to 24.3 lakh in April, the lowest since April 2021. “In recent months, markets — globally and in India — have turned highly volatile and many newbie investors, particularly traders, are losing money. This has partly diminished the retail exuberance and is getting reflected in the declining number of fresh additions of Demat accounts,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
The massive bull run, a series of public issues and the time availability for trading due to work from home had attracted many investors to the equity market in the last two years. The country added nearly five crore new Demat accounts in the last two years since March 2020.
Why the fall?
Vinit Bolinjkar, Head of Research, Ventura Securities Limited, said the decline is not on account of waning retail interest in the stock market. “In CY21, the monthly run rate of new Demat accounts was 20.8 lakh, significantly higher than the monthly run rate of 3.1 lakh and 8.5 lakh in CY19 and CY20, respectively,” Bolinjkar said, adding, “The recent LIC IPO increased this run rate to 43.4 lakh from Jan-Apr, CY22. Hence, post LIC listing, the run rate in April declined to 24.3 lakh.”
Roop Bhootra, CEO — Investment Services, Anand Rathi Shares and Stock Brokers, said, “Another reason is that previous active data includes some short term practices, where dormant accounts were being activated unfairly, and regulators have stopped this since April although it is difficult to estimate how many such accounts existed. Its impact could be seen in the coming months as well.”
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