The analysis done by Motilal Oswal Financial Services also pointed out the primary reason for the declining trend in the addition of new demat accounts.
The number of demat accounts increased to 104 million in October, which is about 41% more than last year. However, according to an analysis by Motilal Oswal Financial Services, the number of new additions declined to 1.8 million this October compared to the same time period last year.
As per a PTI report, the growth of demat accounts has been steadily declining with the number falling to 26 lakh since August, followed by a further decline to 20 lakh in September and 18 lakh in October 2022.
In October 2021, the incremental increase in dematerialized (demat) accounts stood at 36 lakh.
The analysis conducted by Motilal Oswal Financial Services also cited the primary reason for the declining trend in the addition of new demat accounts, reports PTI.
Roop Bhutra, CEO Investment Services, Anand Rathi Shares & Stock Brokers, said, "The primary reason for the market volatility witnessed in the current calendar year is due to global factors and relatively underperformance of the broader markets as compared to frontline indices."
He added that the lesser number of new initial public offerings (IPOs) hitting the market this year as compared to 2021 has also contributed to the lesser number of demat accounts opened in the last few months.
Nitin Agarwal, Senior Group VP, Research-Banking & Insurance, Institutional Equities, Motilal Oswal Financial Services, said growth is slowing due to heightened market volatility following the Russia-Ukraine conflict since January.
It is important to mention that the decline in incremental additions in the month of October could also be due to the festive season as there were effectively only 18 working days in October 2022 as compared to 22 working days in September.
Agarwal, however, believes that the momentum will return given the deep under-penetration along with strength in the equity markets in the long term.
On a month-on-month basis, the number of demat accounts grew by only 2 per cent during the month under review, which stood at 103 million in September.
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