Demat account opening spree continues: Over 40 lakh new accounts opened in February

20 Mar 2024 , 11:58 PM

Bulls appear to be drawing large crowds to the market, as the number of new demat accounts surpassed 40 Lakh in February for the third consecutive month.

Last month, 43.5 Lakh new demat accounts were opened, bringing the total number across India to 14.83 Crore. For the third month in a row, February saw a constant increase in new demat accounts over the 40-Lakh threshold. The figure was 40.90 Lakh in December and 46.80 Lakh in January.

Market watchers find it intriguing that the stampede into the market continues unabated in spite of brokerage cautions on high valuations and persistent caution regarding PSU equities, midcaps, and smallcaps. Global issues, like as China’s economic slump and the possibility that the US Fed won’t raise interest rates soon, complicate matters for a market that is already adjusting to conflicting macroeconomic signals and geopolitical unpredictabilities. Investors worldwide are anticipating the US Federal Reserve’s meeting on March 19–20 for guidance on the key policy rates.

To protect investors from a possible meltdown, AMFI, an association for asset managers, recently asked its member fund houses to limit inflows into smallcap and midcap funds. The request was made on February 27 in an unreported letter in response to a message from the Securities and Exchange Board of India (SEBI), the market regulator. A significant inflow of capital into small- and mid-cap funds has sparked concerns about these funds’ ability to withstand a severe market downturn. Fund firms have also been instructed by SEBI to give more details regarding the risks connected to these funds.

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