Most Indians have no faith in equity markets

Mumbai: While the sentiments in the equity market have improved drastically over the last two years, the investor participation in domestic equities is still limited to very few states.

The top three states or Union territories contribute nearly 45 per cent of demat accounts whereas the top 10 states contribute nearly 84 per cent of demat accounts. An analysis done by Central Depository Services Ltd (CDSL) shows that rural investors continues to remain risk averse to equity markets as only 25 per cent of total demat accounts are from rural area and the percentage has remained largely constant from FY11-FY15.

“There is large scope for increase in the demat accounts even in the states which are top contributors to total number of demat accounts as the percentage of state population covered by demat accounts remain abysmally low at one per cent to two per cent in such states,” it said.

Even as the number of demat accounts have increased over the years, CDSL noted that the number of operational accounts have decreased in terms of percentage and also in absolute terms.

“Very large number of investors (nearly 75 per cent) have not transacted even once during the year ended March 2015,” it said. Another interesting highlight of the study is the gender disparity in equity market participation. The male investors continue to dominate the securities market in India. While women have increasingly become financially independent, the percentage of women considering capital market as an investment avenue has remained constant and relatively low (less than 25 per cent).

There is a direct co-relation between number of demat accounts being opened and the activity in primary market. According to CDSL, healthy primary market is essential for return of retail investors to capital market, which is quite evident by the new demat account opening in recent months.