Demat Accounts Touch the 100 Million Mark. Is It the Right Time to Invest in the Share Market?

In this article, we will cover

• Overview of the Indian Share Market
• Benefits of Investing in the Stock Market
• Demat Account Touch 100 Million Mark
• Growth of Demat Account in India
• Significance of 100 Million Mark
• Popularity of Stock Market Investments
• Is It the Right Time To Invest in the Share Market?
• Demat Account: Gateway in the Investing World
• Things to Consider Before Opening a Demat Account
• Steps to Invest in the Share Market with a Demat Account

Are you looking to invest in the share market but feeling overwhelmed by the recent surge in demat accounts? Well, you are not alone! According to a recent report, the number of demat accounts has touched the 100 million mark. This increase in demat accounts indicates that an increasing number of people are participating in the stock market. But is this the time to invest? In this blog, we will explore the current state of the stock market and the benefits of investing in it. We will also cover the best practices for investing in the stock market. By the end of this blog, you will be well-equipped to make a well-informed decision about investing in the stock market. So, let's get started!

Overview of the Indian Share Market

The Indian stock market is an important part of the Indian economy. It is the sixth-largest in the world. It comprises two main exchanges: the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). Over the years, it has become an important hub for investors worldwide, with more than 6,819 listed companies and a total market capitalization of over $3.19 trillion. The Indian stock market offers numerous investments, including equity, debt, ETFs, and derivatives. Investing in the stock market can give investors the potential to earn high returns and diversify their portfolios.

Benefits of Investing in the Stock Market 

Investing in the stock market offers several key benefits:

• Portfolio diversification: Investing in the stock market allows individuals to diversify their portfolios with various stocks from different industries, mitigating risk.
• Long-term growth: Investing in the stock market over the long term can result in healthy growth and help individuals reach their financial goals.
• Potential for high returns: Historically, the stock market has outperformed other investments, providing the potential for higher returns.
• Professional assistance: Investors can access professional guidance, such as financial advisors and brokerage services, to help them manage their portfolios and make informed decisions.
• Tax benefits: Certain investments, such as stocks in qualified small businesses, may be eligible for favourable tax treatments.

Demat Accounts Touch the 100 Million Mark

The demat account tally in India crossed the 100 million mark for the first time in August 2022. This is the first time in the history of India that such a milestone has been achieved. The data released by the two depository firms — the National Security Depository Limited (NSDL) and the Central Depository Limited (CDL) — has shown that over 2.2 million new accounts have been opened in the past four months. NSDL and CDL cater to 71.6 million and 28.9 million demat accounts, respectively. The two depository entities have Rs 38.5 trillion and Rs 320 trillion assets under custody (AUC). Factors like a sharp surge in the market, work-from-home investment opportunities, increased penetration of internet services, and the desire for a secondary source of income have led to the rapid rise in the number of demat account holders.

Growth of Demat Accounts in India

The growth of demat accounts in India has been steady in the past few years. In March 2020, the total demat accounts in India were 40.9 million, which has grown to 100 million in August 2022. This is a huge increase of 145% in the past two years. The growth in demat accounts has been driven by the rising wealth of people, increasing penetration of equity and mutual funds in the country, and the growing acceptance of demat accounts as an investment avenue. There has been a surge in the number of retail investors in the Indian markets, which the pandemic-fueled retail investing boom has further propelled. This trend is expected to continue in the coming years as more people realise the potential of investing in the stock markets.

Significance of 100 Million Mark 

The 100 million mark for demat accounts in India marks the promising potential of the investment landscape in the country.

• This milestone indicates that more and more people are realising the potential of investing in financial products and markets such as the stock market.
• It reflects people's increasing trust in India's financial system and willingness to try out newer investment opportunities.
• This is a positive sign for the economy and a move in the right direction. It can help people to create wealth and build their financial security.
• Moreover, it can also stimulate the domestic capital market and drive the growth of the Indian economy.

Popularity of Stock Market Investments 

The stock market in India has been gaining in popularity over the years. According to sources, the number of demat accounts in India has crossed the 100 million mark, indicating the growing interest in stock market investments. Furthermore, the Indian economy is expected to grow from 6.5% to 6.9% in the financial year 2022-23. This is expected further to fuel the demand for investments in the stock market. India is also expected to see an increase in foreign direct investment (FDI) equity flows from Japan, the United States, and other countries. This indicates that India's stock market will likely remain popular in the coming financial year. Therefore, it could be a good time to invest in the stock market, provided you conduct thorough research and understand the risk involved in the investments.

Is It the Right Time To Invest in the Share Market?

Yes. It is a good time to invest in the stock market, as the current market conditions present a great buying opportunity. The fact that the demat accounts in India have crossed the 100 million mark is a major milestone for the Indian investment landscape. This indicates that more and more people are exploring the potential of investing in the stock market and other financial markets. The market is forward-looking, and stock values are based on future expected earnings, so investing now could help you take advantage of the potential gains. However, day trading is not recommended, as it does not consider the stock's underlying fundamentals. If you are a long-term investor, investing regularly is the best way to guarantee that you will buy when prices are low and less when they are high.

Demat Account: Gateway in the Investing World

A Demat (short for "dematerialized") Account is an online account that lets investors store their stocks and mutual fund investments electronically instead of in the physical form. It is easy to hold and move securities without holding them physically. A Depository Participant (DP) takes care of and runs the Demat account. The DP acts as a go-between for the investor and the depository. A Demat Account can be opened by an investor at a bank, broker, or other financial institution that can do so by the Depositories Act. Before buying stocks or mutual funds, investors must open a Demat Account to store their investments safely. The account makes trading easy and eliminates the need for manual certificates by letting transactions happen without paper.

Things to Consider Before Opening a Demat Account

Before opening a Demat account, it is important to know the following key things:

• Research: Research the types of demat accounts and their associated fees, terms, and conditions before settling on one.
• Reputation: Ensure the demat account provider has a good reputation and is a trusted, legitimate source.
• Fees: Check the fees associated with the demat account, such as account opening fees, annual maintenance fees, and transaction charges.
• Accessibility: Check if the demat account provider offers online access and customer support if you have any queries.
• Depositories: Compare the facilities and services offered by different depositories before selecting one.
• Regulatory bodies: Ensure the account provider is registered with the relevant regulatory bodies.

Steps to Invest in the Share Market with a Demat Account

Investing in the share market with a demat account is a simple process. Here are the steps to follow:

1. Open a Demat Account: The first step is to open a demat account with a depository participant (DP). You can do this by filling out the appropriate application form and submitting it to the DP with the necessary documents.
2. Fund Your Account: Once the account is opened, you need to transfer funds to the DP by NEFT/RTGS/IMPS or other payment methods.
3. Market Research: Before investing, it is important to research and understand the company and the stock market. This will help you make informed decisions.
4. Place Your Order: Once you are ready to invest, you can place your order on the stock exchange. You can select the type of order, the number of shares, and the price at which you want to buy them.
5. Monitor Your Investment: Once you have placed your order, you can monitor your investment and make changes if needed. You can also track the performance of the stocks you have invested in.
6. Sell Your Shares: When the time is right, you can sell your shares by placing a sell order on the stock exchange. The proceeds from the sale will be credited to your demat account.

Conclusion

Investing in the stock market can be a great way to earn substantial returns over time, but it does come with some risk. Before investing, it is important to research and understand the fundamentals of the stock market. Knowing the basics of demat accounts and the types of stocks will help you make a wise decision. As the number of demat accounts in India has now touched the 100 million mark, it is the ideal time to take advantage of this surge and invest in the stock market. With the right research and a well-thought-out plan, you can be sure of making profits in the long run. Looking to invest in the stock market and take advantage of its many opportunities? Samco, a popular online trading platform, offers several investing choices. Samco's feature-rich software lets you establish a Demat account in a few clicks to trade easily and reach your financial goals. Start investing with Samco's easy Demat account opening!