Indian households' equity exposure to the secondary markets fell by Rs 54,786 crore in FY25 indicating investors likely booked profits amid valuation concerns and heightened volatility according to an article published by the Securities and Exchange Board of India (Sebi).
In contrast, equity investments witnessed strong traction in the primary market as household flows into equities through IPOs, FPOs, rights issues and preferential allotments rose to Rs 95,139 crore in FY25 - more than double the Rs 46,879 crore recorded in FY24.
The domestic households put their trust on mutual funds which turned out as the biggest driver of inflows. The investments through MF schemes in the primary market jumped to Rs 5.13 lakh crore in FY25 from Rs 2.85 lakh crore in FY24 and Rs 1.66 lakh crore in FY23. Secondary market mutual fund flows, including ETFs, also rose sharply to Rs 30,885 crore in FY25 compared with Rs 9,783 crore in the previous year. Together, the flows stood at Rs 5.43 lakh crore.
The article authored by Dr Prabhas Kumar Rath, Shyni Sunil and Kalyani H, revealed household savings through the Indian securities market sharply increased to a record Rs 6.91 lakh crore, nearly doubling from Rs 3.58 lakh crore in FY24. Apart from equities and mutual funds, the other preferred instrumests were debts, REITs and InvITs.
The data highlights a structural shift in household savings behaviour, with financial assets increasingly gaining preference over traditional avenues such as gold and real estate. Sebi noted that the revised methodology now captures a broader set of investments including secondary market participation, REITs, InvITs and private placements, offering a more realistic picture of household participation in capital markets.
The growing appetite for mutual funds was also visible in the stock of household assets. Household mutual fund holdings climbed to Rs 44.39 lakh crore at the end of FY25 from Rs 36.28 lakh crore a year earlier and Rs 24.45 lakh crore in FY23. Even so, household ownership of equities continued to swell due to market appreciation and continued primary market participation. The value of household equity assets increased to Rs 88.92 lakh crore in FY25 from Rs 84.07 lakh crore in FY24 and Rs 53.67 lakh crore in FY23.
The Sebi article said the revised methodology increased the household savings through securities markets-to-GDP ratio to 2.17% in FY25 compared with 1.71% under the earlier approach, indicating that the role of financial markets in household wealth creation had been materially underreported earlier.
The Sebi article emphasized that the household savings channeled through the securities market is a crucial component of the financial savings. The data on household savings reported by RBI relied partly on estimations. While data on mutual fund investments were sourced from Sebi, 35% of the equity via public and rights issuances and 40% of the public issuances of corporate debt were considered for equity and debt, respectively, the Sebi note said. "The household shares in equity, debt and mutual funds, thus computed were in turn used by MoSPI in the computation of Gross Savings in the economy," it said further.
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