India’s $5.1 trillion stock market is increasingly leaning on domestic investors as foreign funds retreat. Retail investors, mutual funds, and insurers have emerged as the market’s stabilizers, pouring in record sums even as global capital flows shift elsewhere.
In 2025, local institutions have purchased more than $59 billion in equities, close to last year’s all-time high. In contrast, foreign investors have withdrawn nearly $14 billion, redirecting their bets toward China’s surging markets. This divergence has left Indian investors shouldering the responsibility of maintaining market momentum at a time when corporate profits remain muted and growth fears loom large following the US’s steep 50% tariff on Indian exports.
The driving force behind this resilience is retail participation. Systematic Investment Plans (SIPs) have attracted more than $3 billion in inflows in recent months, signaling a cultural shift in how Indian households save. Increasingly, families are moving away from traditional choices such as bank deposits, gold, and real estate, and channeling money into equities. “Retail investors have developed a disciplined investing habit through mutual funds, and steady inflows are likely to continue,” noted Vikas Gupta of OmniScience Capital.
This shift has altered the ownership landscape. As of March, domestic institutions’ holdings in listed companies climbed to nearly 18%, overtaking foreign ownership for the first time, according to Prime Database. Christopher Wood of Jefferies observed that recurring equity investments are now “firmly entrenched” in Indian households’ financial behavior.
Despite this strong base, Indian equities continue to lag regional peers. The NSE Nifty 50 Index is up about 4% this year, compared with China’s 15% rally, weighed down by concerns over valuations and subdued earnings. Still, analysts believe that the unwavering support of domestic investors will ensure long-term resilience, marking the start of a new era where local capital becomes the true backbone of India’s markets.
