Over 20% of Indian households are now channelling their savings into financial markets, reveals Economic Survey 2023-24 released by the government today. The count of investors registered at NSE has almost tripled to 9.2 crore between March 2020 and March 2024.

Retail investments have risen recently in the Indian capital markets, both through direct trading and mutual funds. Retail investors directly own almost 10% of the market through their investment in almost 2,500 listed companies, holding around ₹36 lakh crore of wealth as of March this year, aside from the indirect ownership in equity mutual funds holding ₹28 lakh crore in assets under management (AUM).

“The enhanced participation of retail investors in the Indian capital market is hugely welcome and lends stability to the capital market. It has also enabled retail investors to earn higher returns on their savings,” read the survey.

Market entry for such investors was facilitated by several factors during the pandemic and beyond, including seamless technological integration like India Stack, government measures for financial inclusion, digital infrastructure growth, rapid smartphone penetration, low-cost brokerages, the pursuit of alternative income sources, and lower returns from traditional assets like real estate and gold. User-friendly trading apps, mobile educational resources, and financial guidance have democratized market access, enabling quick online account opening, trading from home, and efficient query resolution.

Active retail participation in derivatives trading particularly day trading, is driven by a renewed interest of new mostly younger investors with a higher risk appetite and rising gambling instincts for making hefty gains.

Retail participation rose more substantially and steadily through the indirect channel of mutual funds. With a year-over-year growth of 35%, the total assets under management reached ₹53.4 lakh crore at the end of FY24. This was supported by mark-to-market gains and industry expansion of the industry.

All mutual fund categories witnessed net inflows, except debt-oriented funds. Over 90% of the net inflows into mutual funds were inflows into equity-oriented and hybrid funds.

“Among the passive schemes, exchange-traded funds (ETFs) (other than gold exchange-traded funds) witnessed a 37% rise in net assets in FY24,” the survey added.

The survey reports that investments in these mutual funds have been done via 8.4 crore systematic investment plans accounts, with annual net SIP flows to have doubled in the last three years, from ₹0.96 lakh crore in FY21 to ₹2 lakh crore in FY24.

According to the E&Y Global IPO trends report, Indian exchanges were global leaders in initial public offerings, while the amount raised by these IPOs grew by 24% to ₹67,995 crore, and the number of IPOs increased by 66% to 272 in FY24.

India's digital infrastructure has supported the transition to a T+1 settlement regime and interoperability among clearing corporations, reducing trading costs. Additionally, the NSDL-CAS initiative aggregates demat assets, easing investor management.

Indian households

20% households investing in markets: Economic Survey 2023-24

Where households invest their money