Union Finance Minister Nirmala Sitharaman presented the Economic Survey 2023-24 on July 22. Following the presentation, Chief Economic Adviser Dr. V. Anantha Nageswaran held a press conference to address media queries regarding the survey.
The Economy survey report highlights the surge in retail participation in Indian capital markets through direct (trading in markets through their accounts) and indirect (through mutual funds) channels in the last few years.
As per the report, the individual investor’s share in the equity cash segment turnover was at 35.9 per cent in FY24. The number of demat accounts with both depositories rose from 1,145 lakh in FY23 to 1,514 lakh in FY24. The impact of this influx of individual investors in the market is also reflected in new investor registrations with the exchanges, their share in total traded value, net investments, and ownership in the listed companies.
The report shows that the registered investor base at NSE has nearly tripled from March 2020 to March 2024 to 9.2 crore as of 31 March 2024, potentially translating into 20 per cent of the Indian households now channelling their household savings into financial markets.
A rise in retail participation was more substantial and steadier through the indirect channel via mutual funds. FY24 has been a spectacular year for MFs as their AuM of the MFs increased by ₹14 lakh crore (YoY growth of 35 per cent) to ₹53.4 lakh crore at the end of FY24, boosted by mark-to-market (MTM) gains and expansion of the industry. The total number of folios increased from 14.6 crore at the end of FY23 to 17.8 crore at the end of FY24.
The survey report pointed out that the MF segment presently has about 8.4 crore systematic investment plan (SIP) accounts through which investors regularly invest in schemes. Annual net SIP flows have doubled in the last three years, from ₹0.96 lakh crore in FY21 to ₹2 lakh crore in FY24. Total SIP AuM is approximately 35 per cent of the AuM of the MF industry for equity-oriented schemes. This has pushed up ownership of MFs in Indian equities to 9.2 per cent as of 31 December 2023, compared to 7.7 per cent as of 31 December 2021.
The study clearly shows that retail investors have cashed in their gains in financial markets and been investing in real assets. It is smart portfolio diversification. A conducive economic environment in the form of lower interest rates, sustained post-COVID-19 recovery, elevated inflation, and a supportive policy backdrop also boosted the retail accumulation of capital market assets.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
