Amidst the global pandemic and market disruptions, Indian investors opened 14.2 million new demat account opening in FY2021 which is the highest record. It is almost three times the number in the previous fiscal year. According to data from National Securities Depository Ltd (NSDL) and Central Depository Services Ltd (CDSL), 4.9 million demat accounts were opened in FY2020, compared to a three-year average of 4.3 million in the three fiscal years beginning in FY2018.
Investors are shifting their investments from conventional instruments like gold, real estate, and bank deposits to alternatives like stocks, as indicated by the creation of 1.9 million demat accounts in March 2021, which is the largest monthly rise ever.
Trading in the share market is not possible without a demat account. One needs to open a demat account in order to trade in the market. To invest in securities such as stocks and bonds, an investor opens a dematerialized or demat account with a depository participant (DP). All the shares are stored digitally.
As markets made a robust rally in FY21 after the crash following the national lockdown in March last year, appetite for stock trading increased. People started recognizing stock market as an opportunity to explore.
The covid-19 outbreak was a big influx point for the broking industry as a whole, and we saw record demat account openings as a growing number of millennials began to seek dual or multiple income streams, and the stock market appeared to be a good investment choice.
Share markets are known to be complex and clinical in nature. Due to the increased availability of information and easy access to internet, the millennials and new-age investors are well aware of the market conditions and market volatility.
Though demat account has hit the highest number of account openings, it is expected to increase furthermore in the near future.