Retail investors seem to have kept their faith intact in the India growth story despite volatile market conditions.
In a year that saw the BSE Sensex losing around 24%, the number of demat accounts grew by 5% or 8 lakh between January 2011 and November 2011, according to data from Central Depository Services Ltd and National Securities Depository Ltd.
Demat accounts are those through which investors trade in the share market.
Similarily, the number of such accounts rose by 17% to 2 crore at the end of November 2011 from 1.7 crore at the end of January 2010.Experts, however, differ.
"Demat account may be rising but there is not investment happening from retail investors," said Sudip Bandyopadhyay, MD and CEO, Destimoney Securities.
"Retail investors left the market long back," he said.
Some are of the view that a rise in the number of such accounts reflect the expansion of brokerage firms.
"In the last two years brokerage firms kept on expanding, resulting in the opening of new demat accounts," said Motilal Oswal, CMD, Motilal Oswal Financial Services. "But now the pace of opening new accounts has slowed down due to weak sentiments in the market."
"Another reason for the increase in demat accounts can be the continuous conversion of physical shares into demat form," said Bandyopadhyay.
The process of converting physical shares into the electronic form is known as dematerialisation of shares.