InvestorQ : With demat accounts in India crossing the 10 crore market, what are the key takeaways?
indhumathi Sayani made post

With demat accounts in India crossing the 10 crore market, what are the key takeaways?

3 weeks ago

In the month of August 2022, the total number of demat accounts crossed the coveted 10 crore market. It is not just the numbers but the pace of growth that is really commendable. Here are some key takeaways.

a) While, India saw 10 crore demat accounts mark touched in August 2022, the first 22 years of dematerialization contributed only 40% to this number with the last two-and-half years contributing 60% of this number.

b) Post COVID in March 2020, total demat accounts stood at 4.09 crore. In the next 30 months, the total number of demat accounts have surged nearly 2.5 times grown from 4.09 crore to 10.05 crore. That is an incredible pace of accretion.

c) Two important factors triggered this surge in demat accounts. It was triggered by the rise in millennials entering the equity markets for the first time. Also, with other asset classes tepid, equity via demat accounts looked the best option.

d) But, there were other enabling factors too. Ease of investing and KYC like Aadhar based account opening gave a boost to demat accounts. Smartphones and broadband took demat to smaller towns. Finally, passive ETFs also led the surge in demat accounts.

e) However, there is still a strong correlation between growth in demat accounts and the levels of the Nifty and Sensex. People are still attracted to demat accounts if the markets are robust, not when markets are dull. That is surprising, but true.

f) However, India has just scratched the surface in terms of demat potential. If you add the 30 crore life policies, 50 crore bank accounts and over 110 crore mobile connections, the opportunity is still humongous. It can help de-risk the demat business model.