After Correction, Markets Witness an Investor Rush
SHIFT TOWARDS EQUITY Value-picking in stocks and activity in the primary market result in an increase in new demat accounts
Mumbai: Equities may have fallen sharply from lifetime highs in March last year, but this hasn’t deterred investors from getting into the stock market if the steady increase in new demat accounts is any indication.
This interest is likely to increase as new investors take advantage of reasonable valuations to invest from a long-term perspective, experts said.
National Securities Depository Ltd (NSDL) data showed that 1.8 lakh demat accounts were added in the first two months of the current year, up 1.2% from the number at the end of last year. March proved to be even better in that respect as the market rebound saw another 1.8 lakh demat accounts opened in just one month, bringing the rise in the quarter to 2.5% from the preceding three-month period. That’s faster than the two preceding quarters. The September and December quarters saw the opening of 2.1 lakh and 1.8 lakh demat accounts, respectively, up 1.5% and1.3% on quarter.
According to market experts, the rise can be attributed to value picking in stocks by investors and suggests a growing shift toward equity as an asset class as other avenues such as gold and real estate have not done too well of late. “The market has fallen to the levels that are providing a good entry point for a lot of people who could not get into the market,” said Kamlesh Rao, CEO, Kotak Securities. “It is better to enter when Nifty is at 7,500 levels than at 9,000 levels,” he said, adding however that the demat account base was still low.
Activity in the primary market has also aided the steady increase in demat accounts with initial public offers sparking interest, said Arun Thukral, managing director, Axis Securities. These include IPOs from companies such as IndiGo Airlines parent Interglobe Aviation, Dr Lal Pathlab, Narayana Hrudayalaya, TeamLease Services, etc.
While account activity and ticket size are variable, the pattern of investing shows that most new entrants are tech savvy, opting for online trading. “For Kotak, about 60% participation from demat account holders is through online trading,” Rao said.
The ticket size of new accounts ranges from those putting in as little as Rs 25,000 to high net worth individuals who invest crores of rupees, said Prasanth Prabhakaran, president, retail broking, IIFL.
NSDL data shows that 1.8 lakh demat accounts were added in the first two months of the current year
String of IPOs also helping increase demat accounts