In a battered market retail investor confidence is faltering as heightened volatility slows active client additions and new demat account openings. Data from the National Stock Exchange (NSE) reveals a significant drop in active investor numbers across major brokers, indicating that uncertainty is driving investors away.
The second-largest discount broker, Zerodha, saw over 37,000 active users vanish in January—marking a second consecutive month of decline. Similarly, Upstox and 5paisa Capital reported drops of nearly 28,000 and 21,000 active investors respectively.
Mid-sized players like Paytm Money, Sharekhan, Mirae Asset Capital Markets, IIFL Securities, Samco Securities, Nuvama Wealth, and Geojit Financial Services also experienced downturns, leading to a tepid addition of about 50,000 active clients on the NSE last month. As of January 31, the total active clients of all stock brokers on the NSE stood at 5.02 crore.
Investor decline
Meanwhile, new dematerialised (demat) account openings fell to 28.4 lakh in January—the lowest in 14 months—well below the 2024 monthly average of 38.4 lakh additions. Although the total number of registered demat accounts with NSDL and CDSL stands at 18.81 crore, this figure includes approximately 8 crore duplicate accounts held by individual investors.
Sandeep Chordia, chief operating officer of Kotak Securities, attributed this slowdown to a mix of factors: “a recent market correction, SEBI’s regulatory changes in the derivatives segment, and the absence of major IPOs.”
Since October, the Sensex and Nifty have dropped by around 10 per cent, while the BSE Midcap and Smallcap indices have plunged by 18 per cent and 20 per cent, respectively. The heavy selling by foreign portfolio investors and a barrage of global news have intensified the market correction since January, particularly in the small and mid-cap sectors, said market experts.
“In addition, SEBI’s new rule restricting brokers from partnering with finfluencers—a strategy that previously boosted client numbers—along with fewer weekly expiries and other derivatives curbs, has further dampened retail enthusiasm,” said a top official at a large broking firm.
Even leading brokers feel the impact: Groww added only about 76,000 users in January, marking its first below-100,000 addition month in over a year, while Angel One saw just 13,000 new users—a yearly low.