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The Indian financial market has been witnessing a significant surge in the number of demat accounts, according to a recent report by Motilal Oswal Financial Services. The total number of these accounts reached 175 million in September, up from 171 million in August. This increase is a testament to the robust performance of the Indian stock market, which continues to outperform its global counterparts, attracting more investors and driving up the number of active clients on the National Stock Exchange (NSE).
The NSE, a pivotal player in the Indian financial market, saw its active client base increase by 2.4% on a month-on-month basis, reaching 47.9 million in September. This growth is not an isolated incident but part of a larger trend. The report highlighted that new account additions jumped by 4.4 million in September, with an average monthly addition of 4 million in the current fiscal year to date.
The Indian stock market’s performance has not only attracted new investors but also reshaped the landscape of brokerage firms. The report indicated that the top five discount brokers now account for 64.5% of total NSE active clients, a significant increase from 61.9% in the same month last year.
Brokerage Firms and Depositories: A Changing Landscape
This shift towards discount brokers underscores the changing preferences of investors who are increasingly seeking cost-effective trading options. Among the depositories, Central Depository Services Limited (CDSL) continued to gain market share in terms of the total number of demat accounts. However, on a year-on-year basis, National Securities Depository Limited (NSDL) lost 410bp/90bp market share in total/incremental demat accounts.
The report also shed light on the performance of various online brokerages. Zerodha, a leading online brokerage, reported a 1.1% on-month increase in its client count, reaching 8 million. However, it experienced a slight dip in market share, falling 20bp to 16.6%. On the other hand, Groww, another popular online brokerage, reported a 3.1% increase in its client count, reaching 12.3 million, and a 15bp rise in market share to 25.6%.
Angel One, another key player in the market, also saw a 3.1% increase in its client count, reaching 7.4 million, and a 10bp rise in market share to 15.4%. Upstox reported a 1.5% month-on-month increase in its client count to 2.8 million, but experienced a 5bp fall in market share to 5.9%.
Market Performance and Future Outlook
ICICI Securities, on the other hand, reported a client count of 1.9 million, with a 10bp dip in its market share to 4.2%. The report also provided insights into the overall average daily turnover (ADTO), which grew 7.1% on-month to Rs 538.6 lakh crore. The futures and options ADTO rose by 7.2%, while the cash ADTO declined by 3.8%.
This surge in demat accounts and active clients on the NSE is reminiscent of the boom in retail investing witnessed globally during the COVID-19 pandemic. As lockdowns were imposed worldwide, many individuals turned to stock trading, leading to a surge in demat accounts.
