The Economic Survey 2024-25 has underscored the pivotal role India’s capital markets play in driving economic growth, with a particular emphasis on the surge of retail investors. Despite facing challenges like geopolitical tensions and domestic market fluctuations, India’s stock markets have soared to new heights in FY25. This growth is attributed to the expanding retail investor base, active listing activities, and regulatory support.
India’s capital markets are seen as key to accelerating capital formation, boosting the financialisation of domestic savings, and enabling wealth creation. Over the past decade, India’s stock market has performed strongly globally, with a compounded annual return of 8.8%. The retail investor segment has experienced remarkable growth, rising from 49 million in FY20 to 132 million by December 2024. This sharp increase reflects a growing confidence in the market.
The Economic Survey also highlighted a significant rise in IPO listings, with India emerging as the global leader in IPO activity. In 2024, India’s share in global IPO listings surged to 30%, up from 17% in 2023. The first nine months of FY25 saw a 32.1% rise in IPOs, with the average issue size on the mainboard increasing notably.
The corporate debt market has also witnessed notable activity, with ₹7.3 lakh crore raised through corporate bonds between April and December 2024, though the market remains underdeveloped compared to global standards. Liquidity in the debt market could improve if issues like entry costs, information asymmetry, and the lack of a secondary market are addressed.
Investor participation has continued to rise, with demat accounts reaching 185 million by December 2024, reflecting a 33% annual growth. This surge has fostered a cycle of strong market returns, attracting even more investors. The mutual fund sector has also seen a massive boost, with assets under management (AuM) growing by 25.3%, and SIP inflows more than doubling over the last three years.
The overall performance of the Indian stock market is driven by strong corporate earnings, a growing digital financial infrastructure, and increased trust in mutual funds and online investment platforms. With these positive trends, India’s capital markets are well-positioned for continued growth and inclusion, offering greater wealth creation opportunities for investors.