Whalesbook
The pace of new dematerialised account openings in India slowed dramatically in 2025, with growth rates halving year-on-year. A total of 30.6 million new accounts were added, translating to an average of 2.6 million per month. This represented a 17 per cent increase, a stark contrast to the 33 per cent surge seen in the prior year. The total number of demat accounts now stands at 216 million.
Muted Market Performance
Indian equities experienced significant turbulence throughout 2025. Investors navigated a challenging environment marked by declining corporate earnings and persistent uncertainty surrounding a trade dispute with the United States. Tariffs imposed by the US last year have yet to see a favourable resolution, despite ongoing negotiations. The benchmark Sensex managed a modest gain of 9.06 per cent, while the Nifty closed up 10.5 per cent. Broader market indices fared worse, with the Nifty Midcap 100 rising only 5.7 per cent and the Nifty Smallcap 100 declining by 5.62 per cent. This index performance masks a broader reality where nearly 60 per cent of the top 1,000 listed stocks delivered negative returns.
Analyst Perspectives
Industry experts attribute the slowdown to a combination of factors. Satish Menon, executive director at Geojit Financial Services, noted that demat account growth is influenced by new investors entering the market and existing ones switching brokers. He suggested that broker switching likely decreased last year, coinciding with a "time correction mode" in secondary markets. Prakarsh Gagdani, founder of Soaring Peaks Capital, pointed to market penetration challenges and rising customer acquisition costs for brokers. He stated that lower overall business volumes due to market conditions, coupled with increased spending on customer acquisition, directly impacted broker profitability.
IPOs Offer a Lifeline
The primary driver for new demat account openings in 2025 was the robust activity in the initial public offerings (IPOs) market. A total of 103 firms raised Rs 1.75 trillion through IPOs, providing a crucial catalyst for investors eager to participate in new listings. Many investors open demat accounts specifically for IPO subscriptions, and some even create multiple accounts for family members to enhance allotment chances.
Outlook for Growth
Looking ahead, sustained growth in demat accounts will likely depend on improved equity market performance. Menon anticipates a period of consolidation, followed by potential future spikes. While he projects moderate single-digit growth for benchmark indices next year, a revival in corporate earnings and a reversal in foreign portfolio investor flows could lead to a more significant market upturn, potentially surprising investors.