Demat Account Growth Slows 40% in 9M 2025 Amid Market Volatility

The pace of demat account openings in India slowed significantly during the first nine months of 2025, declining by 40% compared with the same period in 2024. Data from depository firms revealed that 21.8 million new accounts were added between January and September, down from 36.1 million a year earlier.

Slower Demat Account Growth Amid Market Volatility

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The moderation in account growth is largely attributed to sustained market volatility, muted returns, and a reduction in initial public offerings (IPOs), which have dampened retail investor enthusiasm. Benchmark indices have experienced sharp swings, particularly in mid- and small-cap stocks, discouraging new investors from entering the market. Average monthly account additions during 2025 stood at 2.42 million, compared to the record 4 million in 2024.

Historical Context and Industry Perspective

“New entrants are less inclined to enter at a time when the markets appear directionless and broader returns have moderated,” said a senior executive at a major broking. Considering the strong development of demat accounts during the previous three years, industry analysts underlined that the present growth is still healthy despite the decline. Due to the post-pandemic spike in retail investing and the booming initial public offering (IPO) market, demat accounts have more than tripled since 2021.

Industry participants also pointed out that fewer initial public offerings in the first nine months of 2025 are associated with the slower rate of new account openings.  As IPO activity increases and new investment possibilities become available to retail participants, they anticipate a resurgence in demat account growth in the final quarter of the year.

Outlook for the Final Quarter of 2025

Nithin Kamath, founder and CEO of Zerodha, India’s leading brokerage, recently flagged the impact of market conditions on brokerage performance. In a social media post, he noted that several risks highlighted in late 2024 began to materialise, affecting revenues and profits. Zerodha’s brokerage revenues for the June 2025 quarter fell nearly 40% year-on-year, reflecting the challenges posed by a volatile market environment.

Conclusion

While demat account additions slowed considerably in the first nine months of 2025, industry observers view the numbers as a temporary moderation in an otherwise long-term growth trajectory. A resurgence in IPO activity and stabilising market conditions in the final quarter are expected to revive retail investor participation, potentially boosting demat account numbers before year-end.