Individual investors are the largest group in the stock market after promoters. The latest data published in the National Stock Exchange monthly bulletin reveals that individuals account for 9.8% of the market directly and 18.2% when their mutual fund share is added. “Individuals thus own more of the Indian markets than FPIs—the first time since 2006,” the bulletin states.
That is good news for the depth of the Indian capital markets, which can stay relatively calm even if foreigners continue to exit.
The other interesting factor is about the household wealth. It has increased rapidly and can significantly affect India’s future stock market wealth and consumption. It is now estimated at Rs 79.6 lakh crore, growing at an average 10-year rate of 21.3%. It is just under $1 trillion, which is way higher than $500bn worth of Indian equities owned by foreign portfolio investors.
Predicting human behaviour is like predicting the rains. Despite a lot of data and information, it is hard to determine future actions. Factors beyond the standard data now affect the weather and us. Stock market trends are hard to predict, too.
You need knowledge and an understanding of how you react to situations to manage your money.
The NSE publishes a monthly bulletin with information that is easy to understand. Similar bulletins are published by the Reserve Bank of India, the Securities and Exchange Board of India and the Bombay Stock Exchange. To get a sense of financial trends, you must try to read these once a month. You may learn something new. Things you feel are tough to understand; you can ignore them if you do not have anyone to help make sense of them. However, getting into a habit of figuring out future trends could be a helpful habit while investing.
The stock market wealth combined with the gold held by the households makes India’s consumers a potent force. Analysts believe the value of gold Indian households hold is well over $1 trillion.
The households that control that stock market wealth would use it to buy real estate or other assets. They may continue to buy more stocks as new initial public offerings hit the market over the next few years. It is a unique opportunity for businesses to list in India and raise the money needed to fuel growth.
Households can also use that money to spend on luxury, foreign or domestic holidays, weddings, or other key life goals. That is excellent news for the Indian economy if some portion of the stock market household wealth is used for spending. For India to grow faster, domestic consumers must spend more on lifestyle products. It would be even better if such products were manufactured in India.
What does it mean
If you are a long-term investor in India, there is no reason to panic. While share prices have been hammered over the past few months, it offers an opportunity for Indian investors to enter the market or add more quality companies to their portfolios.
The analysis of corporate profits in the NSE bulletin also predicts weaker profit growth for companies in 2025-26. However, many companies expect urban consumption to increase in the second half of 2025-26 and do even better a year later. If share prices continue to fall, the valuation of Indian shares will soon become attractive for all investors.
For those not into direct investing, index or exchange-traded funds offer a good way to gain exposure to equity assets. There is a tendency to cut exposure to systematic investment plans and mutual funds when share prices fall. To benefit from equity asset gains, you must ride through multiple cycles over 10-15 years. There are no free lunches.