Imagine stocks worth crores as share certificates on pieces of paper, which had to be taken physically from the seller to the buyer, and can't be recovered once lost. That hassle was done away with once dematerialised accounts enabled storage and trading of shares digitally in the 90s, and also attracted more investors towards stock markets.
But at a time when online apps have made trading quicker and seamless, opening of new demat accounts has dropped to the lowest levels since 2020.
Prolonged volatility to be blamed
From 2.09 million new accounts added per month in FY23, the number has come down to 1.60 million for the month of April.
Factors such as market volatility beyond 18 months, subdued returns and the absence of attractive initial public offerings, have been cited as the reason behind this dip.
The promise of higher returns from fixed income investment vehicles, scaled up by interest rate hikes, has also triggered the lack of interest in stocks.
Working conditions also a factor
Even as traders exited to escape volatile markets, Systematic Investment Plans delivering positive results consistently, have worked in favour of the markets.
Apart from these, less time at home after employees were called back to office and lower income growth, may also have kept young investors at bay.