India’s investment section is expanding, with demat accounts reaching a record high of 175 million in September 2024! Motilal Oswal reported that the country added 4.4 million demat accounts in September alone. This raises the year-to-date average to an shocking 4 million new accounts per month in FY25, indicating that more Indians are entering the stock market.
What’s Driving the Growth?
This year there has been a record number of initial public offerings IPOs. Even more companies opened their IPO in September collecting over ₹11,000 crore due to the increasing number of people opening demat accounts to experience the IPO lucky draw. However, today many investors registered their relatives and friends in order to get a piece of the IPO as quickly as possible!
New and young investors continue to invest in the stock market even if markets are volatile, and if there are new restrictions and additional taxes arise such as new stringent trading rules and increase in capital gains tax rate. The demat account is gradually increasing which is coming handy in controlling any outflow from foreign funds, thus keeping the market steady.
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CDSL Leads, NSDL Falls Behind
The current increase in demat accounts is also benefiting the Central Depository Services Limited (CDSL) which is persistently increasing its market share. NSDL’s market share dropped by 410 basis points (bp) year-on-year for total demat accounts and by 90 bp for incremental accounts
Discount Brokers Make Some Gains
The five largest discount brokers in India hold a market share of 64.5% on the NSE’s active client list. Among them, Groww was most striking with having grown its client base by 3.1% to take the market share to 25.6% in the period of the study. However, market leader Zerodha continues with 8 million clients, although its market share shrunk by 20 basis points.
Some of the old brokers such as ICICI Securities and IIFL Securities have posted relatively lesser returns but they are not backing out. Currently, its competition in the market includes ICICI has a market share of 4.2%, while IIFL has a mere 1%.
Futures and Options Surge
For the trading business, the Total Average Daily Turnover (ADTO) was up by 7.1% compared to the previous month mainly due to F&O segment up by 7.2%. On the other hand, the cash segment slight declines due to reduced ADTO which declined by 3.8%. The BSE posted the largest growth rate which was 16% jump from the previous month while the NSE was 4.3%.
Commodities Market Shines
Multi Commodity Exchange was on fire in the last month where the trading volumes increased by 17.4 % to ₹53.1 lakh crore. Whereas ITM options and futures trade volumes grew rapidly in crude oil, gold and natural gas were other noteworthy categories which you promised to provide.
The Bigger Picture
The rising number of demat accounts India is also good for the country’s financial markets as it show an increasing trend of households are directing their savings towards equities. For that matter, the household investment in equities soared to ₹ 128 trillion in FY24 as compared to ₹ 84 trillion in FY23, as per the SEBI report.
Since the market has emerged quite strong even with the riots all over the world, and investors have not been discouraged with the change in laws, the Indian stock market is on an expansion trend. The tendency toward the growth in the number of demat accounts is the evidence of active involvement of Indian people in the stock exchange market making the future of investments in India as bright as never.
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Conclusion
India’s investment landscape is expanding, with a record 175 million demat accounts expected by September 2024, fuelled by an influx of new investors, particularly in IPOs. Despite market volatility, increasing taxes, and new rules, investor enthusiasm remains high, maintaining market stability.
CDSL is gaining market share from NSDL, while discount brokers such as Groww and Zerodha dominate the scene. Overall, household investments in shares are increasing, pointing to a bright future for India’s financial markets.
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