For a seller of shares, demat provides an option to split the shares and sell in small lots. "An investor can now sell his 100 shares to 50 investors who are quite happy to own just two shares of companies like Infosys and HLL," said a depository source. Infosys had, in fact, at its recent annual general meeting been asked to provide for a split option in the physical shares as getting amarket lot of 100 shares too was out of reach of a retail investor as this would cost him about Rs 2 lakh.

The response from the company was that it was pushing for dematerialisation for this very reason and in the absence of any market-lot concept any investor could participate in the future of the company. Since then there has been a huge surge in the number of shares that have been dematerialised. The figure which was at 30 per cent of the total equity following dematerialisation by the institutions and promoters has more than doubled in the past two months. "Infosys is a stock that every retail investor would like to own. And it is this factor that has driven the growth in demat shares," said a source.

"The benefits of having no market lots are being felt now, especially with regard to HLL and Infosys stocks," said the source. The amount of stocks that have been dematerialised are expected to cross Rs 42,000 crore ($10 billion) by next week, said sources. The current level is Rs 37,000 crore andanother Rs 2,500-4,000 crore worth of shares are in various stages of dematerialisation.

About 48 companies have seen more than 10 per cent of their equity dematerialised and the figure has exceeded 20 per cent with regard to 20 companies, an indicator that the surge in dematerialisation is spread across companies.