With the benchmark indices scaling fresh peaks, demat account openings touched a record high of 4.18 million in December. The demat account additions were at 2.78 million in November.
According to data from the National Securities Depository (NSDL) and the Central Depository Services (CDSL), the total number of demat accounts stood at 139.3 million as of December end.
Of the total, 104.72 million accounts were with CDSL and the remaining 34.58 million with NSDL. This was a 3.1% increase from November and a 28.7% jump from December 2022.
In comparison, December 2022 had seen a monthly addition of 2.1 million accounts.
The previous highest monthly addition was recorded almost two years ago in January 2022, when 3.4 million accounts were added in a single month.
According to market players, the record rally in the markets, especially the strong momentum in small-caps and mid-caps, triggered the growth.
“This is a momentum-driven rally rather than a value-driven one. The valuations are no doubt high, but investors seem to keep raising their bets. This is a retail-driven market,” market analyst Ambareesh Baliga had recently told FE.
Key benchmarks Sensex and Nifty gained close to 20% each in 2023, while the BSE’s broader MidCap and SmallCap indices also surged over 45% each. While some analysts have called the rally ‘euphoric’ with no justification and anticipate a correction, others say this momentum is likely to continue in the near term.
Besides the rally in the broader indices, factors such as encouraging economic indicators, strong response to IPOs and good listing day gains, as well as the recent state Assembly election results, have given a fillip to the sentiment, with investors seeking to cash in on the momentum.
Analysts say the state election results indicate a favourable mandate for the Centre in 2024, which will ensure continuity in policymaking and the capex and manufacturing push.
Bankers have also said the liquidity in the markets is adding to the interest in IPOs, especially mid-sized ones.