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LIC IPO: Dalal Street has been bustling as a record 34.6 million new investors flocked to the bourses last fiscal. With this, India clocked 89.7 million dematerialized (demat) accounts by the end of March 2022, registering a jump of 63% in FY22, data from the Securities and Exchange Board of India showed. In FY21, the demat tally had risen nearly 35% to 55.1 million.

The relentless rally in stocks since the outbreak of the pandemic has lured younger and tech-savvy cohorts.

A giant leap
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A giant leap

“The market rally in 2020 gave confidence to new investors to enter the capital market. These new investors were early adopters and many more joined in the second round because of the fear of missing out," said Prakarsh Gagdani, chief executive of 5paisa.com.

The 30-share blue chip Sensex is up 2.2 times from the pandemic-induced lows and gave returns of 18.3% during FY22 against a 68% gain in FY21. Extreme volatility at the fag end of the fiscal because of geopolitical tensions and rising inflation have caused jitters.

“Also, the awareness created by fintech players and ease of account opening accelerated the account opening," Gagdani said.

Clearly, market exuberance is driving the newbie retail investors to equities. Except April 2021, each month in FY22 saw more than 2 million new accounts being added. That compares with a monthly average of 1.3 million in the previous fiscal. “India being a young nation, and a positive economic outlook for the next few years points to sustained growth in this area, though the spike may itself not be repeated often," noted Sandip Raichura, CEO, retail broking and distribution, Prabhudas Lilladher.

Meanwhile, growth in demat accounts is poised for another big leap with the much-awaited Life Insurance Corp. of India’s (LIC’s) initial public offering (IPO) this week.

May is likely to be a record month for demat account openings, said Varun Sridhar, CEO of Paytm Money. “It (LIC IPO) is a milestone event for Indian capital markets," he said.

Raichura also feels LIC may draw in several first-time investors though they may not be all active post this event.

Fintechs and brokerages are all set to woo investors with offers. Fintech firm Spice Money has announced its partnership with Religare Broking to help open demat accounts in rural India. Paytm Money is offering free demat accounts to new investors and enabling pre-open IPO applications, while 5paisa.com is offering benefits worth 6,000 to users opening accounts, especially to invest in the LIC IPO.

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