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The National Stock Exchange (NSE) saw over 10 lakh additions in the active number of users in July from a month ago, the biggest spike in 13 months amid a continued market rally.
According to data provided by the exchange, the count of active users on the platform reached 3.19 crore in July, up from 3.09 crore in June. This accounts for a gain of 10.4 lakh active users, the largest since June 2022.
The increase followed a widespread rally in India’s benchmark indices the Sensex and the Nifty as well as midcap and smallcap indices, all hitting new highs in July.
“The continuous upward momentum in the markets, coupled with increased involvement from smaller and mid-sized companies, stands as the primary catalyst behind the notable rise in active user accounts on the NSE during July,” Deepak Jasani, head, retail research, HDFC Securities, said.
NSE defines an active client as an individual who has initiated a trade in the past 12 months.
Investors were either capitalising on gains or ensuring they won’t overlook potential long-term opportunities, collectively driving them to be more active in the market, said Jasani.
In July, around 30 lakh new demat accounts were opened with two depositories, CDSL and NSDL, which is the highest since January 2022 and about 50 percent more than the previous 12-month average of 20 lakh. The total count has also hit a fresh high of 12.35 crore.
Currently, the top five discount brokers account for 61.15 percent of the NSE active clients. In July, CDSL continued to gain market share in terms of the total number of demat accounts and on an incremental demat basis.
On a year-on-year (YoY) basis, NSDL lost 240bp/1300bp market share in total/incremental demat accounts, Hemang Jani, an independent market analyst, said.
“There is a clear positive correlation between market performance and active accounts. During a market rally the number of active accounts always increases,” Jani said.
The near 3,000-point rally in the Nifty from the March lows to July 20 attracted a large number of market participants who were lying dormant during the lull period in the market, said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Over the course of the last year, there has been a consistent monthly decline in the average number of NSE active users, with a decrease of around 6 lakh active users each month. This was due to volatility in the markets before March 2023.
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