India’s retail investing landscape is undergoing a profound transformation, with households increasingly shifting from direct stock picking to professionally managed investment vehicles such as mutual funds, according to a new research paper by the Securities and Exchange Board of India (SEBI).
The study shows that household savings channelled through Indian securities markets surged to a record Rs 6.91 lakh crore in FY25, driven overwhelmingly by mutual fund inflows, even as households turned net sellers in direct equities. The findings point to a maturing investor base where systematic investing, particularly through SIPs, is steadily replacing speculative participation in stock markets.
The research, titled Household Savings through Indian Securities Market, was authored by Sebi officials Dr Prabhas Kumar Rath, Shyni Sunil and Kalyani H, and examines the impact of a revised methodology adopted in consultation with the Reserve Bank of India (RBI) and the Ministry of Statistics and Programme Implementation (MoSPI).
The study found that household savings routed through Indian securities markets nearly doubled to Rs 6.91 lakh crore in FY25 from Rs 3.58 lakh crore in FY24, reflecting a broader and more granular assessment of investments across primary and secondary markets.
Revised Methodology Reveals Bigger Household Market Participation
Under the revised methodology, Sebi incorporated actual data from stock exchanges, depositories and industry bodies, while expanding the scope of computation to include secondary market investments, REITs, InvITs, private placements of debt, municipal bonds and Non-Profit Institutions Serving Households (NPISHs).
The research noted that previous national savings calculations relied significantly on estimations and did not fully capture the growing participation of retail investors in India’s capital markets. Earlier methodologies only considered portions of equity and debt issuances along with mutual fund investments, leaving out several modern investment channels.
According to the report, the revised methodology increased the gross savings-to-GDP ratio by 47 basis points in FY25, pushing the figure to 34.94 per cent compared to 34.47 per cent under the earlier framework. Household savings-to-GDP also improved to 21.7 per cent from 21.23 per cent.
One of the strongest trends highlighted in the Sebi research was the growing dominance of mutual funds in household financial savings.
Mutual Funds Emerge As Dominant Savings Vehicle
Primary market flows into mutual funds rose sharply from Rs 1.66 lakh crore in FY23 to Rs 5.13 lakh crore in FY25, while total household savings through securities markets climbed from Rs 2.59 lakh crore to Rs 6.91 lakh crore during the same period.
At the same time, households emerged as net sellers in the equity secondary market, offloading shares worth Rs 54,786 crore in FY25 after selling equities worth Rs 69,329 crore in FY24.
Commenting on the findings, Jimeet Modi, founder and chief executive officer of Samco Group, said the most significant insight in the report was not the headline growth figure, but the behavioural transition among retail investors.
“The most interesting number in this report isn’t the headline. It is the fact that households were net SELLERS of direct equity to the tune of Rs 54,786 crore in FY25 — and Rs 69,329 crore the year before — even as they were record buyers of mutual funds. This is not retreat. This is maturation,” Modi said.
“The Indian retail investor is booking gains on direct stockholdings and outsourcing fresh allocation to professional vehicles. At least in the equity cash markets, we are watching the structural shift from a punter market to an investor market unfold in real time, on a national balance sheet,” he added.
Highlighting the growing role of mutual funds, Modi further observed that the industry had become the “primary plumbing” of household participation in capital markets.
“Of the Rs 6.91 lakh crore households put into securities markets in FY25, roughly four-fifths flowed through mutual funds. Primary MF flows alone tripled — from Rs 1.66 lakh crore in FY23 to Rs 5.13 lakh crore in FY25. SIPs are now the operating system of India’s household financial savings. Every other channel — direct equity, debt, REITs, InvITs — is now playing supporting cast to the mutual fund,” he said.
Revised Calculations Lift India’s Savings-To-GDP Ratio
The Sebi research also showed that household assets accumulated through Indian securities markets rose to Rs 1.41 lakh crore in FY25 under the revised methodology, compared to Rs 1.28 lakh crore in FY24. Equity holdings accounted for the largest share at Rs 88.91 lakh crore, followed by mutual fund assets worth Rs 44.39 lakh crore.
The paper noted that Indian households have traditionally preferred physical assets such as gold and real estate, but financial assets are increasingly gaining traction due to improved liquidity, higher return potential, digital penetration and government-led financial inclusion initiatives.
Sebi said the use of actual granular data provides a “realistic and accurate picture” of household savings behaviour and improves the quality of data available for economic planning and policymaking.