Mumbai: The pace of demat account additions in India slowed to 24.8 lakh demat accounts in August, against 29.8 lakh in the previous month, as the wobbly market cooled investor rush to equities.

As of August 31, India had a total of 20.46 crore demat accounts. Central Depository Services (CDSL) reported 16.3 crore investor accounts, while its newly-listed peer National Securities Depository Ltd (NSDL) had 4.14 crore demat accounts.

“The slight dip is not surprising, as the market sentiments have been cautious and that tempers the fresh participation,” said Suresh Shukla, chief business officer at SBI Securities

The Nifty and Sensex declined 1.4% and 1.7%, respectively, in August.

The total number of demat accounts at over 20 crore currently has surged about four times from five crore at the end of 2020. Brokers said a large chunk of the new demat account holders are younger individuals from tier-2 and tier-3 towns across the country.

“The profile of new entrants continues to be dominated by retail investors from smaller towns and younger first-time investors, who are attracted to equities, mutual funds, and ETFs (exchange-traded funds) via digital platforms,” said Shukla.While the account openings in August were in line with the monthly average of 24 lakh between January and July, brokers said the numbers may not show the actual picture.”While new accounts are being opened every month, individually, these numbers don’t tell the whole story; the number of active clients on the exchanges has gone down over the past year,” said Sandip Raichura, CEO – Retail Broking & Distribution at PL Capital. “This suggests that many of these new accounts may not be actively trading as they could be either used only for mutual fund investments, or there may be duplications of participants across brokerages.”