In January 2021 alone, 1.

7 million new demat accounts were added, the highest

monthly increase since September 2019 when 1.9 million accounts were opened.
As of January, India’s total demat accounts stood at 51.5 million, compared to 40.8
million at the end of FY20 and 35.9 million in FY19.
A demat account is opened by an investor with a depository participant to invest in
securities such as stocks and bonds. The securities are held in digital format.
According to Ajay Menon, chief executive, broking and distribution, Motilal
Oswal Financial Services, the growth in the number of retail investors and the
surge in demat accounts is due to multiple reasons. “The most common reasons
have been people having more disposable income as well as free time to trade as
most of them were working from home. Markets were volatile and at low points
during the start of FY21 because of which first-time investors and millennials have
been grabbing the opportunity for short-term gains and an alternative source of
income," he said.
Smooth and easy access to stock markets because of technology, such as e-KYC
(electronic-know your customer) and Aadhaar e-signing helped the retail investor
community grow, said experts. The robust addition in demat accounts after the
lockdown was lifted while offices started and businesses resumed operations
indicate stickiness of the retail investor segment.
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Discount online brokerage firm Zerodha, which added 0.7 million new accounts in
the past two months, saw a consistent rise in accounts since April last year, said
Nithin Kamath, founder and chief executive officer, Zerodha.
“With our clients, we see increased participation in direct equity investing
compared to mutual funds. While a majority of our new clients are from Pune,
Bengaluru, Mumbai and Hyderabad, we do see increased participation from tier-2
cities that contribute to almost 40% of new accounts opened. The average age
group of our investors is 20-30 years," Kamath added.
In FY21, as competing asset classes, such as fixed deposits, bonds and real estate,
yielded lower returns compared to stocks, retail investors flocked to trading for a
quick buck. In FY21, Sensex and Nifty are poised for best returns in 11 years. Both
benchmark indices have risen 72-75% in FY21 so far, while BSE Midcap and BSE
Smallcap have surged 96% and 120%, respectively.
Expectations of a faster recovery in the economy and better corporate earnings
instilled confidence in investors, tempting them to pour more money into equities.
Data trends show that after the pandemic, younger or millennial investors in India
have started opening demat accounts to start trading, in sync with the global trend.
Not only that, stock trading has become more gender inclusive with more female
participants in the market as traders or investors as opposed to few years ago.

Demat Account is short for dematerialisation

account and makes the process of holding
investments like shares, bonds, government
securities, Mutual Funds, Insurance and ETFs
easier, doing away the hassles of physical
handling and maintenance of paper shares
and related documents.