New demat additions hit brakes, drop to 21-month low amid market woes: Motilal Oswal
capital markets reeled under negative investor sentiment, new demat account additions fell to their lowest level since May 2023, according to a report by domestic brokerage firm Motilal Oswal. The report states that only 2.3 million new demat accounts were opened in February 2025, down from 2.8 million in January 2025.
Historically, demat additions have slowed during phases of weak market performance, reflecting a downturn in retail investor participation, the brokerage firm said.
Market trading activity saw further declines in February, with Average Daily Turnover (ADTO) falling 4% month-on-month (MoM) to Rs 289 lakh crore. The impact of new F&O regulations implemented in November 2024 continues to be felt, with F&O ADTO dropping 45% since then.
“Other factors such as weak market performance, unfavorable macro environment, and negative investor sentiments have also contributed to the decline,” the report added.
Additionally, retail participation has taken a hit, particularly in the cash and derivatives segments:
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Retail cash ADTO declined 12% MoM to Rs 34,200 crore, indicating lower trading activity among individual investors. Meanwhile, retail F&O premium ADTO fell 6% MoM to Rs 55,900 crore, further emphasizing the shift in investor behavior post-regulatory changes.
While trading volumes in commodities bucked the trend, achieving a new peak in February with ADTO rising 3% MoM to Rs 2.6 lakh crore, this growth was largely driven by futures (up 8%) and options (up 3%), with certain commodities like