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VOL. 8, ISSUE 4 (2026)
The rise of retail investors in Indian Capital Markets: An empirical analysis of demat accounts, market participation, and investment trends
Authors
Prince Patel, Feni Patel, Dr. Chhaya Patel
Abstract
Over the past decade, Indian capital markets
experienced a profound structural transformation characterized by an unprecedented
surge in domestic retail investor participation. Historically dominated by foreign
institutional investors and traditional domestic institutions, the domestic
market witnessed a massive influx of individual investors, catalyzed by India
Stack digital identity infrastructure, zero-commission discount brokerages,
smartphone penetration, and changing household asset allocation preferences
post-COVID-19. This empirical study investigates retail investor participation
in Indian capital markets over an eight-year period from fiscal year 2016–17 to
2023–24. Drawing upon official longitudinal secondary data from the Securities
and Exchange Board of India, Reserve Bank of India, National Stock Exchange of
India, Bombay Stock Exchange, and Association of Mutual Funds in India, this
paper utilizes trend analysis, Compound Annual Growth Rate, descriptive
statistics, Pearson correlation, and Ordinary Least Squares regression modeling
to analyze retail participation dynamics. Total registered Demat accounts
surged from 27.86 million in March 2017 to 151.38 million in March 2024,
representing an annualized compound growth rate of 27.32%. Concurrently,
monthly contributions through systematic mutual fund investment plans increased
from 4,335 crore rupees to 19,271 crore rupees, reflecting an annualized growth
of 23.75%. Econometric estimation revealed that equity benchmark index returns
and mutual fund inflows significantly explained the trajectory of depository
account expansion (R-squared = 0.982, p < 0.001). Furthermore, persistent
domestic retail inflows acted as a structural buffer against foreign portfolio
capital withdrawals during periods of global monetary tightening. However,
secondary regulatory reports also revealed high retail turnover in speculative
derivative contracts, where approximately 89% of individual participants
incurred net financial losses. These empirical findings underscore the
necessity for targeted financial literacy, suitability standards, and
regulatory oversight to foster sustainable household wealth creation.
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Pages:15-18
How to cite this article:
Prince Patel, Feni Patel, Dr. Chhaya Patel "The rise of retail investors in Indian Capital Markets: An empirical analysis of demat accounts, market participation, and investment trends". International Journal of Finance and Commerce, Vol 8, Issue 4, 2026, Pages 15-18
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