About 2.2 million new dematerialised (demat) accounts were opened in May, raising the total to 196.6 million as stock prices continued their upward trend.
This marks the first monthly increase in new account openings since December 2024, following a steady decline from January through April.
Industry experts project the total to surpass the 200-million milestone by mid-July.
The stock market ecosystem attracted fresh investors amid a share price rally. In May, Indian equities extended their gains, with the benchmark Nifty and Sensex each rising nearly 2 per cent.
Broader markets outperformed — the Nifty Midcap 100 climbed 6.1 per cent, while the Nifty Smallcap 100 jumped 8.7 per cent.
Cash segment volumes also reached an eight-month high, signalling renewed investor interest.
The average daily trading volume (NSE + BSE) increased 11 per cent month-on-month to Rs 1.19 trillion — the highest since September 2024 (Rs 1.3 trillion).
The initial public offering (IPO) market, a key driver of new investor engagement, bounced back after two months of inactivity.
Six companies raised Rs 8,983 crore in May, compared to none in March and just one in April.
Yet, this revival has not translated into a marked rise in new demat accounts.
May’s additions remain well below the 12-month average of 3.3 million accounts.
Analysts suggest that upcoming large IPOs this quarter could lift demat account growth. However, a return to the 3-million monthly mark appears unlikely in the near term.
“We have already crossed 196 million demat accounts, indicating strong penetration in a short span.
"The key question is whether retail investors are profiting from the markets.
"The benchmarks have struggled since late September last year, and retail participation tends to increase only with sustained gains in benchmark indices,” said Prakarsh Gagdani, chief executive officer of Torus Financial Markets.
He added that brokerages face limits on spending for customer acquisition due to pressure on their bottom lines.
“Demat account growth depends partly on how much brokers are willing to invest in acquiring customers.
"Brokerage profits have declined over the past few quarters, cutting their marketing budgets.
"It may take another quarter or two before we see growth approaching 3 million accounts.
"The pricing of large IPOs and retail demand will be critical.
"Ongoing uncertainty globally and domestically weighs on sentiment.
"Aside from the 50-basis-point rate cut, there has been little positive news flow recently,” Gagdani added.
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