Mutual fund vs demat account opening: Tale of 2 opposites

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NEW DELHI: With money-making being no more easy on Dalal Street, is the retail interest in the stock market increasing or decreasing? Well, it depends on which data point you are looking at. Painting a tale of two contrasting indicators, the monthly SIP flow coming from mutual funds (MFs) remains at a high but the number of new demat account openings has moderated.

Market data shows that the number of SIP accounts stood at an all-time high at 5.54 crores in June, crossing the May 2022 high of 5.48 crores. SIP inflows remained above Rs 12,000 crore for the second straight month.

Meanwhile, new demat account openings have been moderating after hitting 3.5 million in October 2021. The number of new demat accounts fell to a 17-month low of 1.8 million in June, indicating falling enthusiasm among new investors.

The number of new account additions has been falling every month. The average cash turnovers on NSE also dropped to the lowest in 28 months.

In contrast, mutual fund SIP inflows have remained stable over the last 6 months, with an average monthly inflow of around Rs 12,000 crore. In FY22, overall SIP flows had touched record levels of Rs 124,566 crore.

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The number of retail folios also stood at an all-time high at 10.72 crores as on June 30, registering a rise of 26 per cent YoY, with the industry adding 2.22 crore folios in the last 12 months.
Zerodha CEO Nithin Kamath said robust SIP inflows have been a silver lining for the market but historically we have seen that when markets are down 20 per cent below highs, SIPs also take a dip.

The pain is a lot less in the case of SIPs because of rupee-cost averaging, he said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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