FY26: India’s capital markets have continued to broaden their base in the current financial year, marked by a sharp increase in retail investor participation. According to the Economic Survey 2025–26, presented in Parliament on Thursday, more than 235 lakh new demat accounts were opened during FY26 up to December 2025. The rise highlights a steady shift in household engagement with financial markets, even as global economic conditions remain uncertain.

Growing confidence among individual investors

The latest data reflects improving financial awareness and confidence among Indian households. Despite concerns linked to geopolitical tensions and uneven global trade flows, domestic investors have continued to channel savings into capital markets. This trend has played a stabilising role at a time when foreign portfolio investments have been relatively volatile, helping to cushion market movements.

Equity markets show resilience amid global uncertainty

Between April and December 2025, India’s equity benchmarks delivered measured but consistent gains. Market performance during this period underscored the importance of domestic participation, which offset fluctuations caused by external factors. Supportive policy measures, including tax relief initiatives, easing inflationary pressures and an accommodative monetary stance, also contributed to maintaining investor sentiment.

Policy support and earnings momentum aid market performance

Improving corporate earnings added further strength to market activity during the year. The Survey noted that a combination of healthier balance sheets, steady consumption trends and policy continuity helped companies navigate a challenging global backdrop. These factors collectively reinforced confidence among long-term investors, particularly retail participants who now form a larger share of daily market volumes.

Demat investor base crosses major milestone

A key highlight of FY26 was the number of unique demat investors surpassing 12 crore in September 2025. Nearly one in four of these investors were women, indicating a gradual narrowing of the gender gap in financial participation. The expanding investor profile reflects wider access to digital platforms and increased outreach by financial institutions.

Participation spreads beyond major urban centres

Investor growth has not been limited to metropolitan areas. The mutual fund industry recorded 5.9 crore unique investors by December 2025, with around 3.5 crore coming from cities outside the top urban tiers. This broader geographic spread points to deeper market penetration and the rising appeal of formal financial products in smaller towns.

Household savings tilt towards market-linked instruments

The Survey observed a structural change in how households allocate their financial savings. Investments in equities and mutual funds have grown significantly over the past decade. Their share in annual household financial savings increased from about 2 per cent in FY12 to more than 15 per cent in FY25, reflecting a gradual move away from traditional savings avenues.

Systematic investment plans gain traction

One of the strongest drivers behind this shift has been the rapid growth of systematic investment plans. Average monthly SIP contributions have risen sharply, climbing from under Rs 4,000 crore in FY17 to over Rs 28,000 crore so far in FY26. The steady inflow through SIPs has provided markets with a more stable source of domestic capital.

IPO and SME activity remains robust

Primary market activity also remained firm during the year. Initial public offering volumes were around 20 per cent higher compared with the previous year, while the total funds raised increased by about 10 per cent. Small and medium enterprise listings continued to expand, with 217 companies going public so far, collectively raising more than Rs 9,600 crore.

Corporate bond market records sustained expansion

Beyond equities, the corporate bond market has shown consistent long-term growth. Over the past decade, the segment has expanded at an average annual rate of around 12 per cent. Outstanding corporate bond issuances stood at Rs 53.6 trillion in FY25, while fresh issuances reached a record Rs 9.9 trillion during the year, underlining the market’s growing role in corporate financing.