Despite the stock market turmoil, more than 2.2 million new demat accounts were added in January, the most since August 2022.

Data provided by the Central Depository Service (CDSL) and the National Securities Depository (NSDL) show that the total number of demats exceeds 110 million, with more than 2 million new accounts added each month for the past six months.

Market participants said that some retail investors had opened new accounts to participate in Adani Enterprises’ extensive follow-on public offering (FPO).

The company’s Rs 20,000-crore FPO opened on January 27, days after a report by US short-seller Hindenburg Research accused the group of “brazen stock manipulation and accounting fraud”. The allegations caused a sharp drop in the share prices of all companies in the Adani group. Although AEL’s share price fell below the FPO price, the company still managed to get fully subscribed. However, it withdrew its offer as the share price fell further.

Retail investors, including first-time investors, mostly stay away from FPOs. Typically, a large IPO or FPO attracts a new wave of investors into the equity market. However, whether these clients become active traders or investors remains to be seen.

Continued volatility could be a big hurdle, market experts said. Market participants said that the rate at which new demats are added is reasonable, but there is a lot of duplication.

Future market returns may determine whether new investors are inclined to invest directly. Competition from debt returns, FPI flows to China, and rising valuations will likely keep returns subdued this year.