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CDSL Study Reveals Changing Profile Of Investors

Tuesday, May 24, 2016
By Dominic Rebello

Equity is the preferred mode of investment for capital market investors

The Central Depository Services (India) Limited [CDSL) has announced the release of a report on Profile of CDSL Demat Account Holders. In this study CDSL has compiled the profile of investors in depository environment, their investment pattern and level of transactions based on the data available in CDSL system.

Highlights of the study reveal that: there has been increased awareness about capital market as an investment avenue among people which is evident through consistent increase in the number of demat accounts over a period from March 11 to March 15.

Adverse market conditions immediately affect the investor sentiment.  But to regain the lost confidence of investors, markets have to perform consistently well over a longer period of time. Further, there is a direct co-relation between number of demat accounts being opened and the activity in primary market. Healthy primary market is essential for return of retail investors to capital market evidenced by new demat account opening.

Male investors continue to dominate the securities market in India. Even though it is generally perceived that over a last few years 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%. However, market sentiment plays the same role in decision making of both genders.

The penetration of capital markets in India is limited to very few states / UT.  The top 3 states / UT contribute nearly 45% of demat accounts whereas the top 10 states / UT contribute 84% of demat accounts.

Equity is the preferred mode of investment for capital market investors. The percentage of investors holding IPO allotments for only up to 3 days has increased considerably over a period from Mar-11 to Mar-14 whereas there is marked decline in the percentage of investors holding allotments for more than a year.  Thus, it seems that investors are more interested in short term gains through IPO investments rather than investing in IPO for long term.  
Even though there has been increase in the number of demat accounts, the number of operational accounts have decreased in terms of percentage and also in absolute terms. Very large number of investors (nearly 75%) have not transacted even once during the year ended Mar15.

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