The total number of demat accounts rose by 1.65% to 185 million in December from 182 million in November – the slowest growth in percentage terms since February 2024.
“Since the beginning of October, markets have been in a correcting phase, marking a reversal in trend,” said Jimeet Modi, CEO of Samco Securities. “Given these corrections, the fall in the new addition of demat accounts is expected as investor sentiment has turned negative.”
Since October 1, the Nifty fell about 8.2% while the Sensex declined 7.3%, led by foreign investor selloff and disappointment in second-quarter earnings.
The demat account additions, especially for share trading and mutual fund transactions, are correlated to the market performance, said Somnath Mukherjee, vice president-corporate development at Zerodha.
The Securities and Exchange Board of India (Sebi), in mid-November, restricted the immensely popular weekly derivatives offerings for every exchange to one and increased the minimum contract size in index derivatives to ₹15 lakh from ₹5 lakh. These steps were aimed at curbing the growing interest of retail traders in futures and options.”Sebi has revised margin requirements for options trading, and the weekly expiry is restricted to one per exchange, which led to almost 20% drop in options volumes across exchanges,” said Mukherjee. “This has led to a higher margin requirement for trading in options, leading to a slightly lower participation.”
The absence of big-ticket initial public offerings (IPOs) in December may have also contributed to the lower account openings.
“When bigger brands and household names launch an IPO, typically the demat accounts rise,” said Modi. “This was not the case in December, which explains the slowdown in demat accounts for the month.”
Brokers are bracing for slower growth in account additions in the near future.
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