India's stock market is witnessing an unprecedented surge in investor participation. As of July 2024, the Bombay Stock Exchange (BSE) has nearly 180 million registered retail investors.
The National Stock Exchange (NSE) has also seen substantial growth, with the registered retail investor base crossing 169 million in March 2024. This heightened retail participation in stock markets reflects broader changes in investment behaviour and wealth creation in India. But what is driving this sudden change?
The investment landscape in India has evolved very quickly. Mobile apps and online platforms offering a range of investment services have become increasingly popular. Today, it is very easy to open a Demat and trading account and get started with investments.
The introduction of the Unified Payments Interface (UPI) has also revolutionised the way transactions are conducted. In addition, new investors now have easier access to automated and technical tools that were once primarily available for seasoned investors. For example, advanced charting tools and algorithmic trading platforms.
As of May 2024, the Assets Under Management (AUM) of the Indian Mutual Fund Industry reached ₹58.91 trillion, a six-fold increase from ₹10.11 trillion in 2014. This growth is significantly driven by systematic investment plans (SIPs), which have become a popular choice among investors. In April 2024, SIP contributions hit an all-time high of ₹20,371 crore. The ease of setting up SIPs and the ability to start with small amounts have made mutual funds an accessible investment option for many.
Another significant driver behind the rising investor participation is improved financial literacy and awareness, particularly among young investors. Compared to a decade ago, there’s better access to quality information and educational resources. Thanks to social media, financial influencers, and educational websites, learning about stock market investments is far more accessible now. There's also an increasing number of young people are aspiring for financial independence and early retirement.
The Securities and Exchange Board of India (SEBI) has increased its scrutiny and regulation of the market participants. This offers additional assurance, transparency and security in your investments. Whether it is Futures & options trading or Initial Public Offering, SEBI has established multiple parameters for companies to ensure fair and transparent practices.
Despite the impressive strides, experts say that India’s stock market journey is far from complete. India's relative performance still lags behind other countries, and many Indians remain wary of financial markets, preferring traditional investments like real estate and gold. According to reports, only 2-3% of our country’s population participates in the stock markets.
But this may change faster than we expect. As infrastructure, regulatory frameworks, and investor education continue to improve, India is poised for sustained growth in retail investor participation. If you want to begin your investment journey, you can explore Sharekhan for advanced tools and resources that can enhance your investing experience.