• The number of demat accounts in India has surged to 175 million in September, up from 171 million in August.
• The National Stock Exchange (NSE) saw its active client base increase by 2.4% on a month-on-month basis, reaching 47.9 million in September.
• 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.
• The surge in demat accounts and active clients on the NSE is a continuation of the global boom in retail investing witnessed during the COVID-19 pandemic.

The Indian financial market is experiencing a notable rise in the number of demat accounts, reflecting a growing interest in stock market investments. According to a recent report from Motilal Oswal Financial Services, the total number of demat accounts soared to 175 million in September, up from 171 million the previous month.

This steady growth underscores the strong performance of the Indian stock market, which has been outpacing global peers, enticing new investors and increasing the number of active clients on the National Stock Exchange (NSE). The NSE, a central pillar of India's financial market, saw its active client base rise by 2.4% month-on-month, reaching 47.9 million in September, marking another step in a consistent upward trend.

The report also noted that new account additions surged by 4.4 million in September, with an average of 4 million new accounts being added each month during the current fiscal year.

Discount Brokers Dominate as Investor Preferences Shift

The surge in investor activity has also reshaped the brokerage landscape in India, particularly with the dominance of discount brokers. These low-cost trading platforms now account for a significant portion of the NSE's active clients, with the top five discount brokers commanding 64.5% of total active clients in September, up from 61.9% during the same month last year.

This shift highlights the growing preference among investors for cost-effective trading options, with discount brokers becoming the go-to choice for a majority of retail investors. The report showed that Central Depository Services Limited (CDSL) has continued to increase its share of the demat account market. However, National Securities Depository Limited (NSDL) lost market share, both in total and incremental demat accounts, by 410 basis points and 90 basis points, respectively.

Performance of Key Online Brokerages

Several leading online brokerage firms saw varying degrees of growth in their client bases. Zerodha, a prominent player in the Indian brokerage market, reported a 1.1% month-on-month increase, reaching 8 million clients. However, it saw a slight decline in market share, dropping 20 basis points to 16.6%.

On the other hand, Groww, a rapidly growing platform, posted a 3.1% increase in its client base, climbing to 12.3 million. The company also gained 15 basis points in market share, reaching 25.6%. Angel One followed suit with a 3.1% rise in its client count, totaling 7.4 million, along with a 10 basis point increase in market share to 15.4%.

Upstox, another major brokerage firm, saw a 1.5% rise in clients, reaching 2.8 million, though its market share fell by 5 basis points to 5.9%. Meanwhile, ICICI Securities reported a client count of 1.9 million, though it saw a 10 basis point dip in market share, now at 4.2%.

Trading Activity and Market Outlook

In terms of trading activity, the overall average daily turnover (ADTO) of the Indian stock market grew by 7.1% month-on-month, reaching Rs 538.6 lakh crore in September. The futures and options (F&O) segment contributed significantly, with a 7.2% rise in ADTO, while the cash segment saw a decline of 3.8%.

The surge in new demat accounts and active traders on the NSE draws parallels to the global boom in retail investing seen during the COVID-19 pandemic, when lockdowns pushed many individuals toward stock trading. This led to a substantial increase in retail investors opening demat accounts across the globe, including India.

As the market continues to perform well, analysts expect the influx of new investors to remain steady, further boosting brokerage activity and reshaping the financial landscape.