Amid frequent shifts in global trade policies and heightened geopolitical uncertainty, India’s equity markets displayed measured yet resilient performance during FY 2025-26, supported by sound macroeconomic fundamentals, policy stability, and sustained domestic investor participation, according to the Economic Survey 2025-26 tabled in Parliament by Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman.
The Survey attributes market stability to personal income tax relief, GST rationalisation, accommodative monetary conditions, easing inflation, and improved corporate earnings, particularly during Q2 FY 2025-26.
Market Performance and Primary Market Activity
Between April and December 2025, the Nifty 50 and BSE Sensex gained approximately 11.1 per cent and 10.1 per cent, respectively. Primary markets remained vibrant, with India leading globally in IPO issuances during FY 2025-26 (up to December).
IPO volumes were 20 per cent higher than FY 2024-25, while the total amount mobilised increased by 10 per cent year-on-year. A key feature of this phase was the higher proportion of Offer for Sale (OFS) transactions, reflecting stake dilution by existing shareholders rather than fresh equity issuance.
SME Listings
SME listings rose to 217 in FY 2025-26 (up to December 2025) from 190 in FY 2024-25 (up to December 2024). Funds raised increased from ₹7,453 crore to ₹9,635 crore. Since inception, over 1,380 firms have been listed on the SME platforms of the BSE and NSE, signalling deeper capital market access for emerging enterprises.
Strengthening Market Regulation: Securities Markets Code, 2025
The Securities Markets Code, 2025 marks a major reform by consolidating the legal framework governing securities markets. The Code strengthens governance norms, investor protection, regulatory sandboxing, conflict-of-interest management, and ease of doing business.
For the first time, Market Infrastructure Institutions (MIIs), including stock exchanges, clearing corporations, and depositories, are placed on a clear statutory footing, recognising their public utility role.
Broadening Retail and Household Participation
Retail participation expanded sharply during FY 2025-26. 235 lakh demat accounts were added up to December 2025, taking the total beyond 21.6 crore. In September 2025, India crossed 12 crore unique demat investors, with nearly one-fourth being women.
The mutual fund industry reached 5.9 crore unique investors by December 2025, with 3.5 crore investors (as of November 2025) from non-tier I and tier II cities, reflecting expanding financial inclusion.
Household financial behaviour has also shifted materially. The direct share of households in equity markets increased gradually from under 8 per cent in FY 2013-14 to 9.6 per cent by September 2025, while the indirect share rose sharply to 9.2 per cent.
The share of equity and mutual funds in annual household financial savings rose from 2 per cent in FY 2011-12 to over 15.2 per cent in FY 2024-25. Average monthly SIP contributions increased seven-fold, from under ₹4,000 crore in FY 2016-17 to over ₹28,000 crore in FY 2025-26 (April–November). The SIP investor base expanded from 3.1 crore in FY 2019-20 to over 11 crore in FY 2024-25.
SEBI’s Regulatory and Market Reforms
The Economic Survey highlights SEBI’s sustained efforts to improve market integrity and investor protection. Key initiatives include:
- Mandatory adoption of a new UPI address structure for SEBI-registered intermediaries collecting investor funds, effective 1 October 2025.
- Removal of the requirement for specific SEBI approval for stock brokers operating GIFT-IFSC units, improving operational efficiency and ease of doing business.
Debt Market Development
India’s corporate bond market has expanded significantly, with outstanding issuances rising from ₹17.5 trillion in FY 2014-15 to ₹53.6 trillion in FY 2024-25, growing at an annual rate of around 12 per cent. FY 2024-25 recorded highest-ever fresh issuances of ₹9.9 trillion.
As of March 2025, corporate bonds accounted for 15-16 per cent of GDP. In FY 2025-26, debt markets contributed over 63 per cent of total primary market resource mobilisation during April-December 2025.
Regulatory reforms, including the Request for Quote (RFQ) platform, stronger credit rating governance, and simplified issuance norms, have enhanced market transparency and retail access.
Foreign Portfolio Flows and Domestic Stabilisation
FPI flows in FY 2025-26 reflected global financial volatility. FPIs were net buyers of equities in Q1 FY 2025-26 but turned net sellers in Q2 and Q3, while remaining net buyers of debt instruments. Overall, FPIs were net sellers between April and December 2025.
Despite this, the asset base under FPI custody increased to ₹81.4 lakh crore as of 31 December 2025, marking a 10.4 per cent increase over March 2025.
Domestic Institutional Investors (DIIs) played a critical stabilising role. As of 30 September 2025, DIIs held 18.7 per cent of NSE-listed equities. For the first time in Q4 FY 2024-25, DII ownership surpassed that of FIIs and reached an all-time high in Q2 FY 2025-26. Mutual fund holdings alone rose to 10.9 per cent during the same period.
GIFT City’s Rising Global Profile
As of 30 November 2025, GIFT City hosted over 1,034 domestic and international entities. It advanced nine positions in the Global Financial Centres Index, ranking 43rd among 120 global financial centres. In the fintech category, GIFT City improved by ten ranks, supported by a dedicated regulatory framework, innovation hubs, and academic collaborations.
Conclusion
The Economic Survey concludes that India’s ambition to achieve Viksit Bharat by mid-century requires deep, resilient, and well-regulated capital markets capable of supporting long-term investment and innovation. SEBI’s regulatory modernisation and investor protection measures have strengthened confidence in India’s financial system, a development acknowledged internationally through the IMF-World Bank Financial Sector Assessment Program (FSAP) 2025, which noted that India’s capital markets expanded from 144 per cent of GDP in 2017 to 175 per cent in 2024. (Source: PIB PR ID 2219998)
Economic Survey of India 2025-26 dated 29/01/2026