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Active client base of the industry, however, shrunk during the phase as more market participants cut down on trading on account of the sharp swings. An active client in one who trades with her broker at least once a year.
The total number of demat accounts as on August 31 stood at 12.65 crore, up 10.7% from March 31 this year. The industry had 11.43 crore demat accounts then.
"Demat account addition is linked to market growth," said Sandeep Chordia, joint president at Kotak Securities. "As markets were rising and there was good activity in terms of IPO issuances, you saw more demat accounts getting opened."
The Nifty has gained roughly 13.12% since April 1. The Nifty Mid-Cap 150 Index has risen 33.37%, the Nifty Small-Cap 250 has moved up 39.17% and the Nifty Micro-Cap 250 has advanced 58.12% during this period.
Demat account openings so far in FY24 are a continuation of the growth in the client base since March 2020 when the shutdown on account of Covid-19 prompted individual investors to venture directly into the market. Till then, these investors mostly relied on equity mutual funds. With fixed deposit interest rates also around their lowest levels then, the appetite for trading picked up.
Since March 31, 2020, when the total number of demat accounts was 4 crore, the count has surged 210%. Brokers expect the growth in account openings to continue, led by smaller cities and towns across the country.
"The growth from 2 crore demat accounts 4-5 years back to 12 crore was a momentum that we will continue seeing as the number of accounts goes up to 30 crore in the coming years, with the participation of tier 2, tier 3 & beyond cities and towns," said Kunal Sanghavi, chief financial officer at HDFC Securities.
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