In FY25, Indian households significantly increased their investments in the securities market, with mutual fund inflows reaching a record Rs 5.43 lakh crore. This surge represents a substantial shift from traditional savings avenues to financial assets, driven by strong participation in both primary and secondary markets.
Equity investments in the primary market saw robust growth, with household flows into equities through IPOs, FPOs, rights issues, and preferential allotments rising to Rs 95,139 crore in FY25, more than doubling the Rs 46,879 crore recorded in FY24. The domestic households' trust in mutual funds emerged as the primary driver of these inflows, with investments through mutual fund schemes in the primary market jumping to Rs 5.13 lakh crore in FY25 from Rs 2.85 lakh crore in FY24 and Rs 1.66 lakh crore in FY23.
Secondary market mutual fund flows, including ETFs, also rose sharply to Rs 30,885 crore in FY25 compared to Rs 9,783 crore in the previous year. The overall household savings through the Indian securities market increased to a record Rs 6.91 lakh crore, nearly doubling from Rs 3.58 lakh crore in FY24. This data highlights a structural shift in household savings behavior, with financial assets gaining preference over traditional avenues such as gold and real estate.
The Securities and Exchange Board of India (Sebi) noted that the revised methodology now captures a broader set of investments, including secondary market participation, REITs, InvITs, and private placements, offering a more realistic picture of household participation in capital markets. The growing appetite for mutual funds was also visible in the stock of household assets, with mutual fund holdings climbing to Rs 44.39 lakh crore at the end of FY25 from Rs 36.28 lakh crore a year earlier and Rs 24.45 lakh crore in FY23.
Even so, household ownership of equities continued to swell due to market appreciation and continued primary market participation. The value of household equity assets increased to Rs 88.92 lakh crore in FY25 from Rs 84.07 lakh crore in FY24 and Rs 53.67 lakh crore in FY23. The Sebi article emphasized that the household savings channeled through the securities market is a crucial component of financial savings.
The revised methodology increased the household savings through securities markets-to-GDP ratio to 2.17% in FY25 compared with 1.71% under the earlier approach, indicating that the role of financial markets in household wealth creation had been materially underreported earlier.
Background
The Indian securities market has seen a growing trend of household participation, reflecting a broader shift towards financial assets over traditional savings methods. This change is significant as it indicates a maturing financial ecosystem and a more diversified approach to wealth accumulation.
As the Indian economy continues to evolve, the increasing participation of households in the securities market is expected to play a pivotal role in wealth creation. Investors and policymakers will be closely watching these trends to understand their long-term implications on the financial landscape.
