India exchange-traded funds hot in west

[B. Karthick]

The India story seems to be spreading faster outside the country than
within. On one hand, the number of India exchange traded funds based
out of Europe and the US is rising, indicating that retail investors
in those markets are keen for a slice of action in Asia’s third
largest and second fastest growing economy.

Back home, a look into the regional spread of demat accounts reveals
that twelve states account for about 70% of overall demat accounts in
the country.

Though India’s savings ratio at 40%, remains the second highest in the
world (first being China), only 3.5% of total savings find their way
into the stock market. Investments into direct equity would be in the
range of 0.85% and 1.20% (of net savings), say experts. NSDL and CDSL,
between themselves, claim to have have around 1.54 crore active demat
accounts. NSDL recently crossed 1 crore demat accounts while CDSL has
about 59 lakh accounts (as on August 24).

As per NSDL data (CDSL not included), Maharashtra tops the demat
account league tables by a wide margin with about 17 lakh accounts.
Gujarat bags the second spot with 13 lakh accounts while Delhi and
Tamil Nadu boasts of 7 lakh and 6 lakh demat accounts respectively.

Going a bit deeper, Mumbai tops the list of districts with highest
number of demat accounts at 9 lakh, closely followed by Delhi with 7
lakh accounts and Ahmedabad with 4 lakh accounts. Chennai, Pune,
Hyderabad, Thane, Kolkata and Surat (in that order) are the other
districts with most demat accounts.

“The regional spread of demat accounts has remained more or less
unchanged with only ‘top equity hubs’ gaining in size. While client
addition has been happening moderately in threetier cities and rural
India, the pace (at which accounts are being opened) is no match to
traditional equity hubs,” said Vinay Agrawal, executive director,
equities broking, Angel Broking.

Market watchers, the number of demat accounts that remain frozen for
lack of PAN is still substantial.