By the end of October 2025, India proudly crossed the milestone of nearly 21 crore demat accounts, a remarkable surge from approximately 2.5 crore accounts in 2016 and 4 crore in 2020. This exponential growth underscores a seismic change in how Indians perceive and engage with the capital markets.
Equally impressive is the growth in systematic investment plans (SIPs). Monthly SIP contributions have consistently set new records, crossing Rs. 29,500 crore in October 2025. For the financial year 2024-25 (April–February), total SIP inflows exceeded Rs. 2.63 lakh crore. The assets under management (AUM) of India’s mutual fund industry have more than doubled over the past five years, reaching an all-time high of Rs. 80 lakh crore. The number of mutual fund folios has surged past 25 crore, with active SIP accounts surpassing 9.45 crore as of October 2025.
Key Drivers of 2025: A Year of Strategic Shifts
1) From Foreign Dependence to Domestic Resilience
Despite significant foreign outflows in early 2025, Indian retail investors demonstrated unwavering confidence in domestic equities, underpinning the resilience of the markets. Foreign ownership in listed companies declined from 22% to 17%, while domestic institutional ownership increased from 13% to 20%. This shift signifies India’s move towards a more self-reliant, domestically driven financial ecosystem.2) Technology-Enabled Democratization
The advent of intuitive, user-friendly platforms by traditional brokers, discount brokers, mutual fund providers, and banks has democratized investing. Mobile-first solutions, simplified KYC processes via Aadhaar, and rapid account opening have empowered millions—particularly the youth—to participate in the markets with unprecedented ease.
3) Geographic Expansion Beyond Tier 1 Cities
Retail investor participation also expanded well beyond metropolitan centres into Tier 2 and Tier 3 cities. NSDL’s reach now covers over 99% of Indian pin codes, ensuring that capital markets are truly accessible across the country’s vast geography.
However, it wasn’t all sunshine and rainbows:
1) The Derivatives Dilemma
While retail enthusiasm soared, it also exposed vulnerabilities. Data indicates that between FY22 and FY25, retail investors collectively incurred losses of nearly Rs. 3 lakh crore. SEBI studies reveal that around 91% of retail derivatives traders remain loss-making, underscoring the need for greater investor education and risk awareness.
2) Global Uncertainties and Market Volatility
The year was marked by geopolitical tensions, President Trump’s tariff threats on BRIC nations, and escalating conflicts involving Ukraine and Russia, leading to heightened global market volatility. Elevated crude oil prices, currency depreciation, and sectoral weaknesses in autos and FMCG further tested investor resilience.
3) The Road Ahead: Building a Mature Market Ecosystem
Despite these headwinds, India’s markets demonstrated remarkable resilience. Domestic institutional investors, including mutual funds, LICs, and insurers, continued to deploy capital, offsetting foreign selloffs and reinforcing the maturity of the market structure.
Regulatory reforms introduced by SEBI, including delta-based open interest calculations, tighter market-wide position limits, and real-time surveillance, have further fortified the ecosystem, ensuring a safer environment for retail participation.
Moreover, industry stakeholders—including regulators, exchanges, stockbrokers, mutual fund houses, and insurance companies—have intensified efforts to promote financial literacy, focusing on youth and underserved segments.
2025 will be remembered as a pivotal year in India’s retail investing journey, not because everything was perfect, but because the market faced its first significant stress test and responded through structural reforms. It is a year that exemplifies confidence, conviction, and the resilience of a new generation of investors who are not just trading, but owning their financial future.
In my opinion, this remarkable shift signals India’s ongoing move towards what I call the “Equitization of Savings”—a transformation where savings are increasingly directed into equities and capital markets, fostering a more inclusive and growth-oriented financial ecosystem. I believe this trend will continue for a long time to come.
(Dhiraj Relli, MD & CEO, HDFC Securities)
