Demat account additions slow as markets languish; Upstox, ICICI Securities, 5Paisa Capital lose market share

• Month of March saw 1.9 million new demat accounts compared to 2.1 million in February 2023.
• This figure is significantly lower than the average of 2.9 million new accounts added per month in FY22.
• The uncertainty around the macro environment has impacted investor sentiment and interest in the market.

Additions of new demat accounts have slowed in FY23 as compared to FY22 due to volatility in the equity market amid uncertain macroeconomic conditions.

The new additions of the demat account stood at 1.9 million in March 2023 compared to 2.1 million in February 2023, indicating an 8% decline on a monthly basis.

Adding to it, a report by Motilal Oswal Investment Services shows that this figure is significantly lower than the average of 2.9 million new accounts added per month in FY22. The number of total demat accounts increased to 114 million as of March 2023.

Moreover, the active user count on the NSE decreased for the ninth straight month to 32.60 million in March as against 33.60 million in February.

Additions of demat accounts in the country have been influenced by the market conditions and trend in benchmark indices Sensex and Nifty50, which was the case in 2020 and 2021.

The sell-off in equities in the first three months of 2020 after the COVID-19 outbreak had made the stock markets attractive, which lured a bunch of new investors to open new accounts. There was a fear of missing out as Sensex kept trending higher gaining more than 15% in 2022 alone.

However, the uncertainty around macro environment has impacted investor interest in the market and therefore the slowdown in demat account additions.

Upstox, ICICI Securities, 5Paisa Capital lose market share
Currently, the top five discount brokers including Zerodha, Upstox, Angel One, Groww and 5Paisa Capital account for 60% of the market share, which was earlier being held by traditional brokerage houses.

The shrinking investor interest amid market volatility is reflected in the declining client additions of these discounted brokers.

Zerodha reported a 0.8% month on month decline in its client count to 6.4 million in March 2023, while Upstox reported a decline of 8% to 2.9 million.

Client count of ICICI Securities slipped 5.7% on a monthly basis to 2.3 million in March 2023 while that of IIFL Securities dropped 13%.

With this, market share of Upstox, 5Paisa Capital, ICICI Securities, IIFL Securities, Kotak Securities and Motilal Oswal slipped in March 2023 as compared to previous year.

Overall market share

Brokerage house	March 23	Year on Year growth
Zerodha Broking	19.6%	215 bps
Upstox	8.8%	-565 bps
Angel One	13.1%	296 bps
Groww	16.5%	577 bps
5Paisa Capital	2%	-287 bps
Top 5 Discount brokers	60%	236 bps
Motilal Oswal	2.5%	-2 bps
ICICI Securities	7.1%	-127 bps
HDFC Securities	3.3%	9 bps
Kotak Securities	2.8%	-66 bps
Sharekhan	2.1%	1 bps
IIFL Securities	1.5%	-167 bps

Source: Motilal Oswal Investment Services


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