The morale of small investors has been affected due to increasing market fluctuations. This can be gauged from the fact that the number of new demat accounts opened every month with brokers weakened in January.
Data from the country’s two depotory- Central Depository Services and National Securities Depository reveals that 28.4 lakh new demat accounts opened last month which is the lowest since November 2023. This is a major decline from the monthly average of 38.4 lakh new accounts during 2024.
Demat accounts are necessary to keep securities such as shares, mutual funds and exchange-traded funds (ETFs) in electronic form. The total number of active demat accounts in January reached 18.81 crore. Since investors can keep several demat accounts. Therefore, the number of unique investors is estimated to be around 11 crores. In January, market fluctuations came due to heavy selling of foreign portfolio investors (FPIs). FPI withdraws Rs 75,000 crore in January, which is the second largest selling in a calendar year. This selling caused great weakness in the major indices. The Nifty Smallcap 100 Index rolled 9.9 per cent, which is her biggest decline since May 2022. The Nifty Midcap 100 index declined by 6.1 per cent, the worst since October 2024. Largecap stocks performed somewhat better. The Nifty 50 index declined 0.6 percent. But the fourth consecutive month decline in it.
A recent report by CARAIAD Ratings has estimated a sluggish revenue growth for the stock broking industry. The increase in FY 2025 is estimated to be 13 per cent, which is less than 29 per cent recorded during the last three years. Profit margin is also estimated to be reduced from 36 per cent of 2023-24 to 32 per cent in FY 2025. The report blamed the high rate of securities transactions (STT), increased fees of stock exchange and new trading rules of futures and options (F&O) for this. All these affected the amount of trading and income.
The average daily business of F&O in January was Rs 298 lakh crore, which is up to 6 percent more than the previous month but is still 44 percent below September 537 lakh crore in September. This shows that the industry has to struggle to implement regulatory changes and maintain the changing market environment.
First Published – February 9, 2025 | 10:41 pm IST