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Comeback call for small investors

Mumbai, July 3: If the trading floor’s as chock-a-block as numbers dished out by depositories would suggest, a new dawn for small investors is on the horizon.

A surge in the creation of demat accounts at the country’s depositories is being seen as a sign that retail share buyers are finally returning to the market after spending years as the ring-side viewer of a stock meltdown.

Sources say National Securities Depository (NSDL) and the Central Depository Services (CDSL) have been swamped with applications to open demat accounts since last month.

Many say it was the hugely successful initial public offer (IPO) of Maruti Udyog that triggered renewed retail interest in equity purchases. It was followed by a buying binge on the part of foreign institutional investors (FIIs). Though this did not directly impact the small investor, it sent out a message that the rally will hold.

“The Maruti IPO did generate a lot of interest among retail investors. So many demat accounts have been created since then. The rise in this number is also related to the bullish environment on the stock markets,” a senior official of NSDL told The Telegraph.

Figures collated by NSDL until June 28 show that the number of investor accounts jumped to more than 38.31 lakh from 37.68 lakh in the preceding month — an accretion of 63,000 accounts. A significant part of this increase is believed to have come from swelling retail investors.

“The surge in demat accounts shows the growing participation of retail investors. This is a good sign for the markets,” ASKRJ Investment Advisors’ Jignesh Shah said.

Though the depository has seen the number of new investor accounts fluctuate over the past month, sources say that the figures will stabilise at higher levels this month as the rally on bourses gathers steam.

Officials of CDSL, which has also seen a rise in investor accounts, were not available for comment. The depository currently has around 15 lakh such accounts.

One of the lynchpins of the stock rebound have been the FIIs, which pumped in over $ 34 million in the first two days of this month. Their net investment for the month of June was at Rs 3461 crore ($ 734.4 million). For 2003, net inflows was pegged at Rs 9891 crore.

Brokers say with the old-economy stocks in favour, retail investors have amassed more of these shares.

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