The number of dematerialised (demat) accounts in India surged by 46 million in 2024, with an average addition of 3.8 million accounts per month, marking a 33% increase from the previous year. The total number of demat accounts reached 185.3 million by the end of the year, reflecting growing investor participation in the market.
The rapid rise in demat accounts, especially since the onset of Covid-19, is attributed to the ease of account opening, widespread smartphone adoption, and favourable market returns. Over the past five years, the number of demat accounts has more than quadrupled from 39.3 million in 2019.
The first nine months of 2024 saw the addition of 36 million demat accounts, driven by a strong performance in the secondary market and a record number of initial public offerings (IPOs). However, a decline in new account additions was observed in October and November, due to market turbulence triggered by foreign portfolio investor (FPI) selling and disappointing earnings reports.
The IPO market witnessed a resurgence in December, the highest for the year and the best December since 1996, improving the pace of demat account additions slightly. A total of 15 companies raised Rs 25,438 crore via IPOs last month, contributing to the year’s total of Rs 1.59 trillion raised by more than 91 companies.
A significant number of investors open demat accounts to participate in IPOs, with some even opening accounts for family members to increase the chances of securing IPO allotments.
Experts view the steady rise in demat accounts as a positive indicator for market stability. “The incremental flows from these new investors will help offset any potential outflows from overseas funds or existing investors and help keep volatility under check. The pace of new additions will depend on market performance,” said a senior executive at a brokerage.
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