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Households Shift to Mutual Funds as Direct Equity Buying Moderates: NSE

A National Stock Exchange report reveals that while individual investors became moderate net sellers of direct equities in 2025, households continued routing savings into the market through mutual funds. This shift highlights a growing investor preference for indirect, managed exposure despite interim market volatility. The data shows individuals now hold 18.75% of listed equities, their highest share in over two decades, valued at approximately Rs 84 lakh crore. Cumulative household wealth creation from equities since April 2020 is estimated at a substantial Rs 53 lakh crore, linking capital markets directly to household balance sheets.

Key Points: Households Prefer Mutual Funds Over Direct Equity: NSE Report

  • Direct equity buying turned to net outflows in 2025
  • Households prefer indirect exposure via mutual funds
  • Individual share of listed equities at 20-year high
  • Cumulative household wealth creation since 2020 at ~Rs 53 lakh crore
3 min read

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

NSE report shows moderation in direct equity buying by individuals, but sustained inflows via mutual funds, with household holdings at a 20-year high.

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

Mumbai, January 26

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.

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.

- ANI

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Reader Comments

R
Rohit P
Rs 84 lakh crore! That number is mind-blowing. It shows how much middle-class India's savings are now tied to the stock market. Hope this wealth effect translates into better spending and economic growth for the country.
A
Aman W
The moderation in direct buying is understandable. The market has been volatile. Many retail investors who jumped in during the 2024 peak might have booked profits or gotten scared. Mutual funds provide a safer, disciplined route for most of us.
S
Sarah B
As someone new to investing in India, this report is reassuring. It shows the system is working - people are investing for the long haul through funds. The key figure for me is that 84% of mutual fund equity AUM is from individuals. That's massive public participation.
K
Karthik V
While the shift to MFs is good, we must be cautious. A large part of household wealth is now exposed to market risks. What happens during a prolonged bear market? Financial literacy about asset allocation beyond equities is still needed. This is a respectful critique of the euphoria.
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Nisha Z
My father only invested in FDs and gold. I've convinced my family to start SIPs in 3 equity mutual funds. Seeing reports like this makes me feel we are on the right track for securing our future. The data proves it's a structural shift, not a fad.

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