CDSL demat tally tops 80 million, overall count crosses 111 million

2.2 mn new accounts added in January, highest since August last year

The number of demat accounts opened with the Central Depository Services (India) (CDSL)  —  the country’s largest depository of such accounts  —   has crossed the 80-million mark.

The overall demat account tally, meanwhile, crossed 111 million at the end of January — five months after it hit the 100-million milestone.

Nehal Vora, managing director (MD) and chief executive officer (CEO), CDSL, said that an enormous number of investors across various states and union territories have contributed to the growth.

National Securities Depository (NSDL) accounted for 31 million accounts at the end of last month and had assets under custody (AUC) of Rs 321 trillion while CDSL, on the other hand, has AUC of Rs 40 trillion.

On an average, two million demat accounts per month have got added in the past six months. In January alone, 2.2 million accounts were added, the most since August 2022 — despite the turbulence in the equity markets.

“The monthly additions are more or less a stable number now unless markets fall significantly and the word of mouth on the Street is bad,” said Prakarsh Gagdani, CEO of 5paisa Capital.

Market players said some retail investors opened new accounts intending to participate in the mega follow-on public offering (FPO) by Adani Enterprises.

The company’s Rs 20,000-crore FPO opened on January 27, just days after US short-seller Hindenburg Research’s report accused the group of “brazen stock manipulation and accounting fraud”. The allegations led to a sharp drop in shares of all Adani Group firms. Despite AEL’s share price dropping below the FPO price, the company managed to garner a full subscription.

However, it withdrew the offer as the stock tumbled further.

Retail investors — including first-time investors — largely stayed away from the FPO. Typically, a large IPO or an FPO brings in a new crop of investors into the equity fold.

However, it remains to be seen if these clients became active traders or investors. Market experts said ongoing volatility could be a big hindrance.

"Volatility affects not only customers who are in the market for a while but also the new ones. Monthly returns and sentiment affect new customers more,” said Gagdani.

Market players also pointed out that though the new demat additions was good, there was a lot of duplication.

"A certain number of people get added to the new workforce every year. Markets not giving returns are good for those who missed earlier rallies because you get the opportunity to enter the market. There are also a lot of people who will take a second demat account as some want to split their trading patterns. A new investor would want to do derivatives trading in one account and invest in the other. Or they might keep an additional account in case one broker has some technical issue,' Gagdani said.

Going forward, market returns are likely to determine whether new investors will gravitate towards direct investing. Competition from debt returns, Foreign Portfolio Investor flows shifting to China, and elevated valuations, are likely to keep the returns muted this year.