The Hindu Business Line : Investors rush to open demat accounts

Rising demand
Market men attribute the rise to the expanding geographical profile of the broking community in the country.
The stipulation that allotments under the IPO process be made only in dematerialised form has meant more demat accounts.
The upcoming Reliance Power has been a major pull for a large section of people opening demat accounts.

Our Bureau

Mumbai, Jan. 9 Retail interest in stock market has picked up if trends in ‘active’ demat accounts published by the two depositories is anything to go by.

At National Securities Depository Ltd (NSDL) the number of active accounts grew 7.25 lakh during October-December 2007 quarter compared with 5.22 lakh in the immediate previous quarter. At the CDSL the growth had been even more dramatic with a near two-fold increase in the number of accounts. The outstanding active accounts grew by 6.9 lakh in the last quarter of 2007 compared with 3.8 lakh in the third quarter.

Geographical profile

Market men attribute the rise, among other things, to the expanding geographical profile of the broking community in the country with many of them opening branches in tier-two and tier-three towns.

The middle class boom characterised by the increasing income levels is enabling a large section of the society to seek opportunities to increase their wealth by investing in equity is another factor, said another

“Last six months have seen a lot of good IPOs which have attracted a lot of retail participation as they did not want to miss the opportunity to make money by investing,” said Mr Sanjay Someshwar, sub-broker, Ventura Securities Ltd. The stipulation that allotments under the IPO process be made only in dematerialised form has meant more demat accounts.

According to some others the increasing retail interest is not only because of the new IPOs but also because of the spate of new fund offers by both new and existing players in the mutual fund industry in the past months.

“The mid-cap and small-cap stocks have also started to give good returns which have attracted huge investor interest,” said Mr Jignesh Desai, head of institutional sales, SBICAP.

Reliance Power

A section of brokers do think that the upcoming Reliance Power has been a major pull for a large section of people opening demat accounts.

“Since the Reliance IPO was announced, there is a line outside every DP office and hundreds of application forms are pending and it seems like a mad rush of people wanting to open demat accounts,” added Mr Someshwar.

“The market is moving fast and so people from every nook and corner of the country seem interested in investing in the equity markets,” said Mr Shailendra Nahar, dealer at Mehta Equities Ltd.