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Vibrant Stock Market Brings India’s Unique Investor Base to Over 50 Million

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The number of investors in the country has exceeded 50 million, the country’s main stock exchange, the National Stock Exchange (NSE) said on Monday. The number of unique investors is 30% lower than the total dematerialized accounts (demat) in the country. Indeed, several investors have several demat and trading accounts with more than one broker. At the end of September, the total demat accounts with CDSL and NSDL, the country’s main depositories, stood at 70.2 million.

The number of demat accounts increased 40% to 20.4 million this year, many of which are first-time investors. The strong increase in the investor account was supported by the dynamism of the stock market, the ease of opening an account and the move to working remotely following the covid-19 pandemic. The benefits offered by brokerage houses, such as fee waivers and gift certificates, to attract new clients have also led to investors with multiple accounts.

“The number of investors registered on the NSE exceeded 50 million on October 25. While it took about 15 months to go from 30 million registered investors to 40 million, the next 10 million investor registrations took less than seven months. The total number of client codes registered with the exchange is 88.6 million (clients can register with multiple trading members), ”NSE said in a press release.

While an investor can have more than one mat or trading account with different participating custodians and trading members, they are linked to a single permanent account number (PAN).

Market participants said the number of unique investors dealing only in stocks could be less than 50 million, as NSE registered investors also deal in other commodities such as gold and bonds.

“Investors can diversify their portfolio on the exchange platform by investing in stocks or through the route of exchange-traded funds (ETFs) or mutual funds, government securities through a platform of ‘non-competitive bidding, corporate bonds, real estate via investments in REIT & InvITs, gold via gold ETFs or gold sovereign bonds ”, said Vikram Limaye, Managing Director and CEO of NSE.

Assuming a population of 1.4 billion, Indian stock market penetration is currently less than 4%.

Limaye said the industry is working to push the number of investors past the 100 million mark over the next 3 to 4 years.

Small towns jump on the fairness train

NSE said northern states accounted for 36% of new investor registrations, followed by western India with 31%. Meanwhile, the southern and eastern states account for 20% and 13% of new investor registrations, respectively.

At the state level, Maharashtra accounts for 17 percent of the largest investors, followed by Uttar Pradesh with 10 percent and Gujarat with 7 percent of new investor registrations. The top 10 states accounted for 71% of new investor registrations.

Interestingly, the growth in investor registrations has been largely driven by non-metropolitan cities, indicating that the growing interest in stocks is not limited to subways.

According to NSE, cities beyond the top 50 accounted for 57% of new investor registrations, while cities beyond the top 100 contributed 43%.

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