Pratik Oswal, Head - Passive Funds, Motilal Oswal AMC.
Credit: Special Arrangement.
India’s capital market is evolving into one of the most vibrant sectors of the economy, driven by increasing investor participation, technological advancements, and rising financial literacy. Companies operating within this ecosystem—including stock exchanges, asset managers, depositories, and brokers—are uniquely positioned to benefit from this growth.
A surge in market participation
The number of retail investors in India has grown significantly, with demat accounts increasing from 4.1 crore in 2020 to 17.5 crore in 2024. This rise is driven by easier access to financial markets, thanks to digital onboarding processes like Aadhar-based e-KYC and mobile trading platforms. Systematic Investment Plans (SIPs) have also gained popularity, with monthly flows exceeding Rs 24,000 crore, showcasing the growing appetite for disciplined, long-term investing.
Digitisation - a revolution
Technology has played a pivotal role in transforming India’s capital market. Faster settlement cycles, real-time payments via UPI, and dematerialised asset holdings have made investing seamless for millions. These advancements have benefited companies like stock exchanges, depositories, and brokers, enabling them to handle higher volumes with greater efficiency.
IPO boom
India has emerged as a global leader in IPO issuances, with over Rs 64,000 crore raised between 2019 and 2024. This reflects both investor confidence and the growing maturity of the market. Companies facilitating IPOs, including stock exchanges and merchant bankers, are reaping the rewards of this capital-raising surge.
Underpenetration holds vast potential
Despite this growth, India’s capital market remains underpenetrated. Only 8 crore people actively trade in the stock market, and equities constitute just 5.8% of household assets. As financial literacy improves and disposable incomes rise, a massive influx of new investors is expected, offering immense opportunities for firms that support and facilitate market participation.
The key players
The ecosystem comprises diverse players, each critical to the market’s functionality. Stock exchanges. asset management companies, depositories, brokers and wealth management firms stand to benefit from rising transaction volumes and a growing investor base.
The road ahead
India’s capital market firms are poised for a bright future, supported by increasing domestic savings, digitisation, and regulatory reforms. For investors, these firms represent a chance to be part of India’s economic growth story, offering the potential for long-term wealth creation. As more Indians embrace the capital market, the companies enabling this shift are set to thrive.