Dalal Street has been bustling with activity as a record 34.6 million new investors have flocked to the exchanges over the past financial year. With this, India registered 89.7 million dematerialized (demat) accounts by the end of March 2022, registering a jump of 63% in FY22, according to data from the Securities and Exchange Board of India. In FY21, the number of counts increased nearly 35% to 55.1 million.
The relentless rally in stocks since the outbreak of the pandemic has attracted younger, tech-savvy cohorts.
“The market rally in 2020 gave confidence to new investors to enter the capital market. These new investors were early adopters and many more joined the second round for fear of missing out,” said said Prakarsh Gagdani, Managing Director of 5paisa.com.
The Sensex 30-stock blue chip rose 2.2x from pandemic-induced lows and gave returns of 18.3% in FY22 versus a 68% gain in FY22. fiscal 21. Extreme volatility at the end of the fiscal year due to geopolitical tensions and rising inflation caused concern.
“Additionally, the awareness created by fintech players and the ease of account opening has accelerated account opening,” Gagdani said.
Clearly, the exuberance of the market is pushing beginning retail investors into equities. With the exception of April 2021, each month of FY22 saw over 2 million new accounts added. This compares to a monthly average of 1.3 million in the prior fiscal year. “India being a young nation, and a positive economic outlook for the next few years indicates steady growth in this area, although the peak does not come often,” noted Sandip Raichura, CEO, Retail Brokerage and Distribution, Prabhudas Lilladher.
Meanwhile, demat account growth is set to take another big leap with Life Insurance Corp’s highly anticipated initial public offering (IPO). of India (LIC) this week.
May will likely be a record month for demat account openings, said Varun Sridhar, CEO of Paytm Money. “It (LIC IPO) is a landmark event for Indian capital markets,” he said.
Raichura also thinks that LIC could attract several new investors, although they may not all be active after this event.
Fintechs and brokerages are all ready to entice investors with offers. Fintech company Spice Money has announced its partnership with Religare Broking to help open dematerialization accounts in rural India. Paytm Money offers free dematerialization accounts to new investors and allows pre-open IPO applications, while 5paisa.com offers benefits worth ₹6,000 to users opening accounts, including investing in LIC’s IPO.