Indians are adoring stock market investments and coming out of the traditional investment myth is evident from the rising number of Demat accounts. In August 2024, there were 42.3 lakh new Demat accounts opened which increased the total Demat accounts to 17.11 crore. From 2024 until date, nearly about 3.18 crore Demat accounts were opened which exceeded the previous year’s count of 3.10 crore accounts. The monthly accounting opening also increases on a YoY basis as in 2023’s August; only 31 lakh accounts were opened. However, on a MoM basis, it dropped marginally from 44.44 lakh accounts opened in July 2024.
New Milestones Achieved
India is now at the ninth position as per the number of Demat accounts and the comparison is with the most populous countries as well. Demat account opening in August again pushed the numbers higher. However, the interesting fact here is that the present number of Demat accounts in the country even exceeds the population of some of the most populous countries like Russia, Mexico, Ethiopia, and Japan. Even though it is on its way to surpass Bangladesh’s population, isn’t that unbelievable? Since January 2023, more than 6 crore of Demat accounts have been added as per reports submitted by depositories.
What is driving the growth of Demat accounts?
This unparalleled ruse in the number of Demat accounts indicates the rising interest of retail investors and Indian households in stock market investments. The primary factors driving the growth include –
- Ease of investing in the stock market and other capital market instruments. With digitalization and dematerialized formats, investing in the market has become simple and safe. This has given the required boost to the investors. Online KYC registration is another reason for a quick and increasing number of Demat accounts open.
- Financial awareness has increased and people are now not that skeptical about markets like those that they used to be earlier.
- Myths like stock market or mutual fund investments are only for rich people and have been put to an end with SIPs and brokerage-free trading platforms.
- The significant rise in the stock market and equity indices touching new highs frequently boost the confidence of retail investors. It has been observed that with spikes in the stock market, the number of account openings also increased.
Apart from these factors, the prime reason for which investors are attracted to investing in the stock market is the strong economic condition in the country. A favorable business condition, stable government, and economic policy.
Investors are more focused on long-term investments while they also consider the short-term factors for capitalization of sudden market surges.
That said, the current valuation of the market has gone too far as per the analysts. The Nifty 50 increased 39% since January 2023 while Sensex rose 35% and the BSE mid and small cap index rose a whopping 94% during the period, which is a little worrying as the market may be overvalued at some places.
Wrapping up
While the rising participation in the stock market has raised the valuation, the growth and economic stability are backing the investments. As per experts, the overall market can be anticipated to remain stable and opportunities for long-term investments to thrive.
Source: MoneyControl
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Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.