The stocks of brokerages and market intermediaries have been on the run for the past few months. They are up between 70 to 310 percent.
Angel Broking leads the pack with an over 300 percent gain in 3 months, BSE has gained 110 percent and ICICI Securities 90 percent. The laggard has been 5paisa with a gain of 49 percent.
The number of demat accounts is up 50 percent at 62 million versus 41 million at end-FY20. They rose steadily from 21 million at the end of FY13 to 36 million in FY19. The pace picked up after that and it scaled to 41 million in 2020, 55 million in fiscal 2021 and finally to 62 million now.
In an interview with CNBC-TV18, Dinesh Thakkar, chairman & managing director (CMD) of Angel Broking and Mithun Aswath, managing partner of Kivah Advisors spoke at length about the trend in demat accounts.
Is there a correlation between the bump up and the stock market running to new highs? According to Thakkar, yes.
"We are seeing that people from tier-II and tier-III and beyond, who never had any access to the market, have got an opportunity to not only access the market but information and rules that app (mobile application) brings in. Therefore, multiple things have helped the sector to grow,” he said.
There is the pandemic angle to it as well.
“COVID lockdown forced everyone to explore opportunities to invest and currently equity is the best asset class compared to other asset classes. So with this trend, the millennials come to the market and remain in the market for a longer time. This has helped the industry to grow and get the recognition that was needed,” he said.
Technology penetration and awareness is a key factor too. The recent IPO rush has only supplemented this.
“The COVID situation and awareness in terms of digital has helped increase penetration of a number of broking accounts especially companies like Angel Broking and new fintech (financial technology) companies are pushing new age investors and millennial play a large part of incremental addition to demat accounts as well as the broking accounts,” said Aswath.
For the entire discussion, watch the video