By September 2022, Demat accounts in India had crossed the magic mark of ten crore accounts opened. Analysts surmised that this is a clear message that Indians are buying stocks through direct channels and investment is on at a fast and furious pace. The rise has been gradual, but the past two years have seen a sharper rate of growth in the opening of new Demat accounts. Global market influences have been thought to be a cause for this.
The pandemic, instead of quieting the mood of investors, had the opposite effect. Between the early part of 2020 and the latter half of 2021, Indian stocks were the world’s best performers. When global markets were down and out, Indian stocks were being invested in with frantic fervor. When any investor wants to open a demat account, this is a sign that investment in stocks is going to follow. Despite the downtrend in employment and spending, Indian stocks acted as stable sources of income generation during the past few years, and more and more individuals sought to open demat accounts. After this boom in the stock market, aggressive hikes in rates by the Federal Reserve made foreign investors pull out some $33 billion from local shares. This happened in the nine months before June 2022.
As Indian investors keep a close eye on global markets, they see opportunities for investment and rush to open Demat accounts. Anyone can open a Demat account online easily and the moment news of markets rising comes, new Demat account holders sprout up. The same thing occurs when any upcoming IPO is announced.
In the current scenario of international financial markets, funds from overseas have returned with force, and this is true of the last quarter of this year. Some $7.6 billion has been pumped into the markets and the Indian markets have been supercharged again. This has promoted the opportunity for investment in the stock markets and Indians are going all out and opening Demat accounts with gusto.
The general trend of global markets is connected strongly to the most robust economy in the world, that of the USA. In the Indian context, there is an inverse relationship between the Indian stock market and the index of the dollar. When the dollar index drops, Foreign Institutional Investors or FIIs tend to invest more in the markets of India, as these give higher returns than gains from dollars. This is the case now, and hence, the surge in the opening of Indian Demat accounts is rational.
This is the right time to invest in the markets as India is undoubtedly outperforming the rest of the world. If you want to invest, the time is now for you to open a demat account. The S & P may be down, but the Nifty is up by a good amount. Added to this, there is a lot of enthusiasm from retail investors - both directly and via SIP and mutual fund investment. While you navigate your way through the stock market, you may come across a good upcoming IPO to consider as well.