The Hindu Business Line : Retail interest tepid despite flurry of IPOs, market surge

Mumbai, Oct. 20 Despite the spate of initial public offerings and the surge in the equity market, demat accounts have not shown any acceleration in growth in August or September.

Demat accounts rose at a steady rate of 1.34 per cent both in August and September, show data collated from depositories NSDL and CDSL.

Fresh additions — at around 2 lakh every month for the last four months — might seem substantial, but are not commensurate with the bullish sentiment for stocks, said marketmen. The total number of demat accounts stands at 155.67 lakh accounts as on September against 153.61 lakh accounts as on August-end.

The increase in new demat accounts is not substantial, given the rising interest in equities, both from existing and new investors, said Mr Motilal Oswal, Chairman and Managing Director, Motilal Oswal Financial Services.

“This is because retail investors are still not entering the market in a big way, it is just a trickle,” said Mr Rajnish Rangari, Country Head, Investment Banking, CMG, Karvy Investor Services. “There is no significant change in retail investor sentiment during the past few months.”

Typically, there is a big surge in new investors during the IPO season, but this time the pattern is different, according to a senior official at one of the depositories.

One of the reasons is that this time the IPOs, unlike earlier, are not crowd pullers. This is because the issues are rather aggressively priced, remarked Mr Oswal. August and September have seen seven IPOs, including the much-awaited big ticket ones of NHPC, Oil India and Adani Power.

As even the bigger IPOs have not given any remarkable returns on listing, retail investors are shying away from them, said some brokers.

The retail investor appears to be unsure about the sustainability of the rally in the equity markets, said Mr Jagannadham Thunuguntla, Equity Head, SMC Capital.

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