India’s Financial Revolution: How Young and Women Investors are Driving the Capital Market Boom

A Decade of Transformation in India’s Capital Markets

India's capital markets have undergone a seismic shift over the past decade, marked by a remarkable rise in investor participation. According to a recent report by the State Bank of India’s (SBI) Economic Research Department, the number of demat accounts in the country has skyrocketed to over 150 million in FY24, a dramatic leap from just 22 million in FY14. This surge is driven by increased financial literacy, access to technology, and growing confidence in equities as a wealth-building tool.

In a nation traditionally inclined towards physical assets like gold and real estate, the financialisation of savings is not just a trend but a revolution.

Demat Accounts: The Growing Numbers

Since 2021, India has been consistently witnessing the opening of at least 30 million new demat accounts annually. FY24 saw this number cross 150 million, with 92 million unique investors on the National Stock Exchange (NSE) alone. SBI Research predicts that new demat account registrations in FY25 may surpass 40 million, underlining the country’s growing affinity for equity markets.

The Rise of Women Investors

One of the most striking trends is the increasing participation of women in the stock market. Nearly one in four investors today is a woman, a figure that is steadily rising:

• Top-performing states:

  • Delhi: 29.8% women representation.

  • Maharashtra: 27.7%.

  • Tamil Nadu: 27.5%.

• Lagging states:

  • Bihar: 15.4%.

  • Uttar Pradesh: 18.2%.

  • Odisha: 19.4%.

While states like Delhi and Maharashtra boast female representation above the national average of 23.9% in FY25, others like Bihar and Uttar Pradesh have room for growth.

Younger Investors Take the Lead

The declining mean and median age of investors reflect a significant influx of individuals under 30 into the stock markets. Technological advancements, reduced trading costs, and easier access to financial education have made equity markets more accessible than ever to younger generations.

This demographic shift is crucial as it brings long-term engagement, higher risk appetite, and innovative trading strategies into the market.

Mutual Funds: The Preferred Choice for Savings

The financialisation of household savings has also been driven by the growing popularity of mutual funds, particularly through Systematic Investment Plans (SIPs).

• The number of new SIP registrations has surged fourfold since FY18, reaching 4.8 crore in FY25.

• SIP contributions have touched ₹2 lakh crore annually, solidifying mutual funds as a cornerstone of household savings.

The Role of Market Capitalisation in GDP Growth

The SBI report highlights the correlation between market capitalisation and GDP growth. A 1% rise in market capitalisation results in a 0.06% boost to GDP growth.

In FY25 (till October), the NSE’s market capitalisation has grown more than sixfold since FY14, reaching ₹441 lakh crore. This expansion underscores the critical role of the capital market in driving economic development.

Capital Mobilisation: A Decade of Growth

Indian companies have increasingly turned to capital markets for fundraising, with the amount mobilised growing tenfold over the last decade:

• FY14: ₹12,068 crore.

• FY25 (till October): ₹1.21 lakh crore.

This impressive growth highlights the deepening reliance on equity markets for corporate financing.

Equity Market Trends

The surge in equity trading has brought significant changes to market dynamics:

• The average trade size in the equity cash segment has risen from ₹19,460 in FY14 to ₹30,742 in FY25.

• The household savings allocation to shares and debentures has grown from 0.2% of GDP in FY14 to 1% in FY24.

• Equity now accounts for 5% of household financial savings, up from 1% a decade ago.

What’s Driving the Change?

1. Technological Advancements
   User-friendly trading platforms, mobile apps, and real-time market access have democratized investing.

2. Lower Trading Costs
   Reduced brokerage fees and zero-cost platforms have made stock market participation more attractive.

3. Increased Financial Awareness
   Campaigns and educational initiatives by market regulators and institutions have enhanced financial literacy.

4. Policy Support
   Proactive measures by the government and regulators have encouraged retail participation in the equity markets.

Future Prospects and Challenges

Growth Potential

The Indian stock market's expanding reach is set to grow further, with increasing participation from smaller towns and rural areas.

Challenges

• Bridging the gender gap in lagging states.

• Educating first-time investors to mitigate risks associated with equity markets.

In conclusion, India’s capital market boom reflects a transformative shift in how the nation saves and invests. With over 150 million demat accounts, increasing participation of women, and a growing younger investor base, the future of financialisation in India looks brighter than ever.

As households embrace equities and mutual funds, and companies continue to raise significant capital through markets, India’s economic engine is set to gain further momentum, driving sustainable growth for years to come.