Indian households are increasingly switching from direct stock selection to professionally managed investment vehicles like mutual funds, which is causing a significant shift in the country’s retail investing environment, as per latest study compiled by the Securities and Exchange Board of India (SEBI).
According to the study, even though households became net sellers of direct stocks, savings channelled through Indian securities markets reached a record Rs 6.91 lakh crore in FY25, primarily due to mutual fund inflows.
The results indicate a mature investor base where speculative stock market involvement is gradually being replaced by systematic investing, especially through SIPs.
Sebi broadened the scope of the calculation to include secondary market investments, REITs, InvITs, private debt placements, municipal bonds, and Non-Profit Institutions Serving Households (NPISHs) while incorporating actual data from stock exchanges, depositories and industry bodies under the revised methodology.
The study pointed out that earlier national savings estimates were heavily dependent on estimates and did not adequately account for the increasing involvement of individual investors in India’s capital markets. Several contemporary investment channels were excluded by previous methods, which only took into account a percentage of debt and equity issuances in addition to mutual fund investments.
The report states that the gross savings-to-GDP ratio grew by 47 basis points in FY25 as a result of the updated methodology, reaching 34.94 per cent as opposed to 34.47 per cent under the previous framework. Additionally, household savings-to-GDP increased from 21.23 per cent to 21.7 per cent.
The growing number of mutual funds in household savings was one of the most notable trends identified in the Sebi study.
While total household savings through securities markets increased from Rs 2.59 lakh crore to Rs 6.91 lakh crore during the same time, primary market flows into mutual funds surged dramatically from Rs 1.66 lakh crore in FY23 to Rs 5.13 lakh crore in FY25.
The study noted that the household assets acquired through Indian securities markets increased from Rs 1.28 lakh crore in FY24 to Rs 1.41 lakh crore in FY25 under the revised methodology. At Rs 88.91 lakh crore, equity holdings made up the largest portion. Mutual fund assets came in second at Rs 44.39 lakh crore.
It further added that although Indian consumers have historically favored tangible assets like gold and real estate, financial assets are becoming more popular as a result of more liquidity, greater potential returns, digital penetration, and government-led financial inclusion programmes.
