Direct equity buying by investors moderate, households route savings via mutual funds: NSE report

MUMBAI: While direct participation by individual investors in the equity market has moderated after record inflows in 2024, Indian households have continued to channel their savings into equities through mutual funds, highlighting sustained confidence in equities as a long-term wealth creation avenue, according to a report by the National Stock Exchange (NSE).

The report noted that after witnessing net investments of Rs 1.7 lakh crore (USD 19.8 bn) in 2024 and consistent buying over the previous five years, individual investors turned moderate net sellers in 2025. During the year, net outflows from individual investors stood at Rs 5,717 crore (USD 0.6 bn).

Despite this moderation, cumulative net investments by individuals in NSE's secondary market over the past six years remained strong at Rs 4.5 lakh crore, highlighting a structural shift toward market-based savings.

NSE stated, "direct buying by individual investors moderated after the record inflows seen in 2024; households continued to channel savings into equities".

According to the NSE report, households continued to prefer indirect equity exposure through mutual funds even as direct equity buying slowed. This trend reflects growing maturity among investors and sustained belief in equities as a long-term asset class for wealth creation.

The report also highlighted the structural importance of ownership and household wealth effects. As per report data, individuals, both directly and through mutual funds, held 18.75 per cent of listed equities, marking the highest share in over two decades. The total value of individual holdings was estimated at around Rs 84 lakh crore, which is more than five times the level recorded in March 2020.

Nearly half of household equity exposure remains through direct shareholding, while the remaining portion is routed through mutual funds. Individuals account for about 84 per cent of equity assets under management (AUM) in mutual funds, the report said.

Despite interim volatility during the second quarter of FY26, cumulative household wealth creation since April 2020 was estimated at Rs 53 lakh crore.

The report described this wealth accretion as a key mechanism linking capital markets to household balance sheets and, over time, influencing consumption patterns and investor confidence.

The report further stated that household equity wealth rebounded strongly in the first quarter of FY26 following a sharp sell-off in the latter half of FY25. However, during the September quarter, household wealth moderated again, partly offsetting earlier gains.

Even with this marginal decline, the report emphasised that cumulative household wealth creation since April 2020 remains substantial at roughly Rs 53 lakh crore.

As of September 2025, the combined value of household equity exposure across direct ownership and mutual funds stood at approximately Rs 84 lakh crore, reflecting the growing role of capital markets in household savings.