The number of demat accounts in India continued to climb in February, reflecting sustained investor interest. However, the growth rate hit its slowest pace in 21 months, primarily due to heightened market volatility and a broader stock market correction. While retail participation remains strong, the uncertainty in the markets seems to have made new investors more cautious.
This slowdown raises an important question: Is investor sentiment shifting in response to market fluctuations, or is this just a temporary pause before the next wave of growth? As markets stabilize, it will be interesting to see whether demat account openings regain momentum in the coming months.
Investor participation in the stock market continued to expand in February, but at a much slower pace. Around 1.92 million new demat accounts were added during the month—the lowest growth rate since May 2023 and marking the second consecutive month of deceleration.
In January 2025, new demat account openings stood at 2.83 million, down from 3.26 million in December 2024, highlighting a steady decline in momentum. Despite this slowdown, the total number of demat accounts registered with NSDL and CDSL reached 190.40 million in February, up from 188.14 million in January.
The slowdown in new demat account additions comes at a time when the Indian equity markets are experiencing a correction, driven by sustained selling from foreign investors. Elevated valuations, a slowing economy, weak earnings growth, and concerns over a global tariff war under the Trump administration have further dampened investor sentiment.
So far this year, benchmark indices Sensex and Nifty 50 have dropped around 4.5% each, while broader indices have seen even sharper declines. The BSE Midcap index has fallen by over 14%, and the Smallcap index has plunged more than 17%.
With market volatility on the rise, investors—especially retail participants—seem to be treading cautiously. Whether this is a temporary phase or an early sign of shifting market dynamics remains to be seen.
