BSE Adds a Record of 1 Crore Investor Accounts in 107 Days

If there is one infallible indicator of the spread of the equity cult in India, it is the speed at which investors are flocking to the stock markets. In the last few months, they have been literally flocking to the stock markets by the dozen. At least, that is the visible trend if you look at the accretion in investor accounts. The Bombay Stock Exchange added a total of 1 crore accounts in just 107 days between June 06th and September 21st. 

Let us put this growth in perspective. The BSE is nearly 130 years old and the Sensex itself is nearly 42 years old. However, the BSE touched a level of 1 crore investor accounts only in 2008. From that point, the BSE added 3 crore investor accounts in the next 10 years at an average accretion of 1 crore accounts every 3 years. Between 2018 and 2021, the investor accounts at BSE doubled from 4 crore to 8 crore. That perhaps captures the real story.

The reasons are not far to seek. Bond yields are at historical lows and real estate is very volatile. Indian households have seen a huge wealth effect due to the appreciation in the price of gold over the last 3 years. Much of that money has gravitated into equities. To underline this shift to equities, a huge army of young millennials are preferring direct equities and equity mutual funds as a stepping stone to long term wealth creation.

This 8 crore number is a combination of trading accounts and mutual fund accounts, but nevertheless this is indicative of a huge equity asset shift among investors. The trend indicated by the BSE is also largely corroborated by the surge in the number of trading accounts and demat accounts at brokerages. Even SIP flows into mutual funds (predominantly equity funds) have surged to nearly Rs.10,000 crore per month with over 4.4 crore SIP folios at work. Clearly, this is equity cult at its very best.