New demat account openings drop 33% amid market volatility
What's the story
The year 2025 witnessed a significant decline in new demat account openings, with a drop of nearly 33%. The decline was mainly due to weak stock market returns and persistent volatility that affected retail investor participation. According to data from National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL), a total of 30.63 million new demat accounts were opened during the year, marking a sharp decline from the over 46 million added in 2024.
Investor behavior
Market volatility impacts investor sentiment
The sharp swings in benchmark indices and steep corrections in mid-cap and small-cap stocks have dampened risk appetite among new investors. The Sensex and Nifty ended the year with gains of about 10% each, while BSE MidCap index rose around 1%. However, the BSE SmallCap index fell about 5%. Analysts have attributed this slowdown to heightened market volatility, geopolitical tensions, sustained foreign investor outflows, subdued earnings, and stretched equity valuations.
Market activity
IPO fundraising remains active despite market conditions
Despite the challenging market conditions, IPO fundraising remained active across both mainboard and SME segments. However, several listings delivered muted or negative returns, which has reduced retail enthusiasm for entering the market. Experts have warned that without a revival in investor confidence and stronger performance from new listings, the pace of demat account additions could continue to be subdued in future years.
Account growth
Total demat accounts reach all-time high
Despite the slowdown in new account openings, the total number of demat accounts with NSDL and CDSL rose to a record high of 215.93 million during the year. This is an increase from 185.3 million a year earlier. The data shows that while new account additions have slowed down sharply, the overall growth trend continues as more investors are opening demat accounts amid changing market conditions.