October sees 4-month low in new Demat account to 3.45 million additions amid market volatility

After a strong four-month period demat account additions for October 2024 saw a decline amid volatility in the Indian stock markets, according to ANI citing an ICICI Securities report.

Demat accounts additions exceeded 4 million in the preceding four months and saw a decline below the number in October 2024, it noted.

October 2024 Demat Account Additions

As per the report, the total number of accounts added in October fell to 3.45 million, down from 4.36 million in September 2024 — breaking a four-month streak of steady growth in demat accounts. This also suggests a possible shift in investor sentiment or market conditions, it added.

“Demat accounts additions fall below 4mn after four months After four consecutive months of more than 4mn demat accounts additions in a month,” the report said.

Among depositories, the Central Depository Services (CDSL) maintained a strong lead in market share. In October 2024, CDSL's share of total and incremental demat accounts stood at 79 per cent and 90 per cent, respectively.

Individual Investor Activity

Meanwhile, individual investor activity showed mixed trends in September 2024 across different market segments. The report stated that the number of individual investors actively trading in the NSE cash market increased slightly.

In September, 15.8 million individual investors traded at least once, marking a 1.9 per cent increase from 15.5 million in August. Over the first half of the financial year (6MFY24), a total of 29.4 million individuals participated at least once in the cash market, compared to 30.7 million for the full FY24.

Derivatives Market View

However, participation in the equity derivatives segment saw a downturn. The number of individual investors trading at least once in a month on the NSE's equity derivatives segment dropped by 3.6 per cent in September, falling to 4.46 million from 4.66 million in August.

For the first half of FY24, a total of 8.7 million individuals participated in the derivatives market, a decline from 9.6 million for the entire FY24. This decline indicates a reduced interest in derivatives trading among individual investors, possibly due to increased volatility or changing market preferences.

The report said, "A total of 29.4mn individuals have participated at least once in 6MFY24 vs 30.7mn in FY24. Individual investors, who traded at least once in a month on NSE's equity derivatives segment, declined 3.6% MoM in Sep'24 to 4.46mn vs 4.66mn in Aug'24".

The dip in both new demat accounts and derivatives participation among individual investors suggests a cautious outlook among retail participants. As global economic conditions remain uncertain domestic markets face volatility amid the continued selling by foreign investors.

(With inputs from ANI)