The growth in equity markets over the last one year has had a corresponding impact on investor sentiment leading to their entry into stock markets.
The number of new investor accounts (demat accounts) opened in the period between July 2014 and June 2015 stood at 16.7 lakh — a four-year high.
As a result of this, the overall demat account numbers have risen from 2.2 crore at the end of June 2014 to 2.37 crore in June 2015.
Data available with the Securities and Exchange Board of India (Sebi) shows that the number of accounts opened over the 12-month period ended June 2015 is more than double of that opened in the corresponding period ended June 2014.
It was way back in 2011 that more investors had entered the market in the 12 months under study and the numbers stood at 18.4 lakh then. While the inflow of new investors in 2014 and 2015 has been a result of improved sentiment after the formation of a stable government at the Centre, the inflow in 2010 and 2011 was a result of a sharp recovery in the markets after they crashed on account of the financial crisis in 2008-09.
The rise in investor interest in direct equities has happened despite the absence of big bang IPOs. Investors followed the jump in the secondary markets.
In the calendar 2014, the benchmark Sensex at the Bombay Stock Exchange jumped 30 per cent thereby pulling investors into the market.
The retail influx is not just for direct equity investment. Even in case of mutual funds, there has been a significant rise in the number of new folios (a unique account number where your mutual fund investment units lie) over the last one year. It was the first time in five years that the investor accounts for mutual fund investments have witnessed a rise.
For the financial year ended March 2015 the industry added 25.1 lakh folios in the equity schemes. In the quarter ended June 2015, the industry saw a further addition of 8.88 lakh accounts taking the number of equity folios to 3.25 crore.
While the number of equity folios stood at 4.09 crore at the end of March 2010, they had declined for four consecutive years and came down to 2.91 crore.
This was the first time in five years that the industry saw net inflow of investors into mutual funds.
The addition in equity folios saw the overall folio base rise from 4.17 crore at the end of March 2015 to 4.27 crore in June. It stood at 4.79 crore at the end of March 2010.
Equity mutual funds have also witnessed a sharp rise of inflow of funds and over the last 15 months it has crossed Rs 1 lakh crore.