Indian Brokerage Industry in a nutshell: ??

The Indian retail broking industry has transformed significantly in the past decade due to the adoption of digital platforms and innovative pricing models like flat fees and zero brokerage.

At the same time, due to the growing awareness for equity market as an asset class and increasing disposable income, the number of demats accounts have grown exponentially.

1. Demat Account Growth

Over the past 12 years, India's population increased at an annual growth rate of 1% from 2011 to 2023, while the number of demat accounts surged at an annual growth rate of 18% during the same period.

In 2011, there were 2.04 Cr. demat accounts which grew to ~15 cr. by the end of 2023. This shows that demat account as % of the population has grown significantly.

2. ‘Rest of India’ is in the lead

Over the past 3 years, there has been notable shift in demographics of retail investors in investing in stocks and mutual funds. Previously, majority of investment originated from top five states. However, recent trends indicate that a significant portion of investors are now emerging from areas beyond these major states.

Equity market participation has significantly grown from tier 2/3 cities, and even rural India.

Today, of the total investors, the top 5 states account for 48% while ‘Rest of India’ accounts for 52%.

3. Digital Brokers Are Winners

Digital brokerage firms have transformed the brokerage industry. By offering zero or flat fees and the convenience of mobile investing, they have attracted a growing number of investors.

While there are numerous choices available for investors, the top five brokers enjoy dominant market share of 64%, due to low cost offering and user friendly interface.

4. Digital Brokers Flourishing in a Stagnant Industry

The network effect is evident by the fact that 77 out of every 100 new investors prefer the top digital brokers.

5. Increasing Regulation

SEBI has put in guard rails along with the growth of capital markets. Despite that, demat accounts and cash in the industry have grown tremendously and remain at an all-time high.

This shows that regulation had positive effects on the industry, alleviating some worries of the investors.

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