Just like the IPO craze that India witnessed last year, there was a rush to open demat accounts too. The year 2021 saw a huge amount of investors from all strata of Indian society open demat accounts, either in a frenzy to invest in stock markets or to apply for any upcoming IPO. At the time this was happening, sentiments were, for the most part, bullish, with everyone scrambling in a herd. However, when you look at the statistics of demat account opening in the next year, the current year, 2022, the picture is quite different.
Why is there a lull?
If you are trading in the share market today, you know that you need to open a demat account. The opening of a demat account implies that the person is trading in the stock market. Hence, if you open a demat account today, this means that you wish to start investing in the share market. It is interesting to note that demat accounts that were opened last year were in larger numbers than those opened in June this year. However, what is even more noteworthy is that although demat accounts were opened, they may not necessarily indicate trading activity in the stock market. The reasons for this are valid and mostly, centre around the stock markets losing their charm for many potential investors. Equities have dropped to thirteen-month lows. Additionally, the small-cap shares and mid-cap shares have taken a beating. Consequently, the euphoria that existed last year has died to a large degree.
Retail Investors Slowdown
In October 2021, there was still some momentum to invest in any upcoming IPO, and open demat accounts for stock investing in the share market. However, analysts are implying that the share market today is a sleepy place. In October 2021, analysts add, benchmark indices had made their lifetime highs, and were bound to come down. However, there were still many retail investors who were living in the hope and expectation that the markets would remain on the upside for a longer period.
Unfortunately, with the upcoming IPO trend also declining somewhat, analysts don’t see any signs of market recovery too soon. Feeble recovery attempts may be made, but due to circumstances beyond anyone’s control, such as the Ukraine war, inflation hitting new peaks, etc, the volumes of trading have miserably shrunk in the past six months. In the years from 2020 - 2021, the opening of demat accounts implied a robust trading activity of investors, but it does not indicate this in present times. This largely shows that people may be opening accounts, but are waiting for stock market recovery to actively invest and trade.
Any Revival?
Analysts say that the sentiment of retail investors has been adversely affected by the sell-offs in October 2021. These were, by all accounts, short-lived, and have been conducted by overseas investors. With this, and the exponential growth of the IPO market, plus market volatility to contend with, the revival of the stock market may not be anytime soon. However, this does not mean that you do not explore, open a demat account and invest. You may get the advantages of low prices and stick to your holdings for the long term. Consider a good upcoming IPO investment to allocate your funds to, and you may see prosperity in the long run.
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