Demat account additions in nine months of 2025 fell nearly 40 per cent as weak returns and sustained volatility dampened retail investor enthusiasm.
Data from depository firms show that 21.8 million new accounts were opened between January and September -- about 14 million fewer than the 36.1 million added during the same period last year.
Benchmark indices have swung sharply this year, with steep corrections in mid and smallcap stocks curbing the risk appetite of new investors.
"Over the last year, markets have delivered modest to flat returns across indices, and sentiment has turned cautious. This has resulted in lower participation from first-time investors, who typically enter the markets during strong bull phases.
"Moreover, the demat customer base expanded exponentially in the last few years, and hence the incremental growth rate is moderating for the time being," said Suresh Shukla, chief business officer, SBI Securities.
There were 2.42 million average monthly additions in 2025, significantly lower than the record 4 million per month the previous year. While the slowdown appears steep, industry players said the current pace reflects a consolidation phase after three years of rapid expansion.
"The recent decline in demat additions reflects maturation, not retreat,' said Trivesh D, chief operating officer at Tradejini. "[Consider] recent IPO disappointments, foreign outflows and regulatory tightening on speculative plays, and you understand why first-time investors are taking their time. But this calibration is healthy."
-- Mayank Patwardhan, Business Standard