Picture yourself in 1982, standing in a bustling brokerage office, clutching a few paise as you wait for a broker—the Dalal—to hand you a form to buy 10 shares of a banking or automobile company. Around you, the air buzzes with brokers shouting orders across the floor and into telephones, chaos reigning supreme.
Now fast-forward to the present, where, with just a few taps on your phone’s brokerage app, you can place an order for any number of shares in mere seconds, effortlessly navigating the digital world of investing.
The Indian capital market is counted as one of the world’s best-performing markets. The NSE today is the fastest-growing stock exchange in the world. As India races toward becoming a $10 trillion economy by 2033*, its capital markets have become a focal point for both domestic and global investors. In this blog, we explore a few of the reasons that have led to this development
Retail Participation at an All-Time High
India’s retail investor base has expanded exponentially, with demat accounts growing at a 29% CAGR from 2.3 Cr in Sep-16 to 17.5 Cr in Sep-24, covering nearly every region of the country. This surge in participation reflects the democratization of market access through technological integration and financial literacy initiatives.
- SIP Contributions: Systematic Investment Plans (SIPs) have emerged as a preferred investment mode, with monthly inflows surpassing ₹24,509 crore in Sep-24.
- Mutual Fund Penetration: AUM from Tier-2 and Tier-3 cities has grown from 8% in 2018 to 19% in 2024, highlighting the reach of mutual funds into smaller towns.
Primary Market Leadership
India’s IPO market has witnessed a record-breaking surge:
- IPO Growth: From 33 IPOs in FY13 to 209 in FY24, a sixfold increase.
- Global Positioning: India is leading in IPO volume globally and in capital raised, surpassing developed markets.
- SME IPOs: SMEs contributed significantly, with 162 IPOs in FY24, reflecting the growing role of smaller businesses in the capital market ecosystem.
Technological Integration: The Game Changer
Technology has revolutionized India’s capital markets, enabling seamless investor access and operational efficiency:
- Aadhaar-Based eKYC: Reduced onboarding time from days to minutes.
- T+1 Settlement: India became the first country globally to implement one-day settlement cycles, enhancing liquidity and reducing risks.
- MF Central: A centralized platform for mutual fund investors to track and manage portfolios efficiently.
- Digital IPO Applications: The introduction of UPI in IPOs has streamlined retail investor participation.
Policy Reforms: Enabling Growth and Stability
SEBI and RBI have played a pivotal role in creating a robust regulatory framework to foster investor confidence and market stability.
- Debt Market Development: SEBI’s framework for private placements and online trading has boosted corporate bond issuance, growing at 9% CAGR since FY13.
- Investor Protections: Measures like rolling settlements, corporate disclosures, and fraud monitoring have enhanced transparency.
- Alternative Asset Classes: Products like REITs, InvITs, and social stock exchanges have diversified the market.
Scope Ahead
- Shift In Investment behavior: People are moving away from traditional investment asset classes like cash & deposits to MF & Direct Equities
- Population Advantage: India’s young, tech-savvy population is expected to drive digital investing adoption.
Conclusion:
India’s capital markets have not only evolved but have set benchmarks for efficiency, resilience, and inclusivity. With rising financial literacy, robust regulatory frameworks, and increasing retail participation, these markets are poised to play a pivotal role in the nation’s journey
For investors, this may be an opportune moment to harness the growth potential of India’s capital markets, Whether through equity, mutual funds, or innovative products like REITs, the avenues for wealth creation are vast and promising.
Disclaimer : This article has been issued on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this document is for general purposes only and not a complete disclosure of every material fact. The Stocks mentioned herein is for explaining the concept and shall not be construed as an investment advice to any party. The information / data herein alone is not sufficient and shouldn’t be used for the development or implementation of an investment strategy. It should not be construed as investment advice to any party. All opinions, figures, estimates and data included in this article are as on date. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. The statements contained herein may include statements of future expectations and other forward-looking statements that are based on our current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Readers shall be fully responsible/liable for any decision taken on the basis of this article. Investments in securities market are subject to market risks, read all relevant documents carefully. Capital market companies are heavily influenced by the volatility of financial markets and regulatory changes
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
