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Capital Markets Landscape

A bird’s eye view of Indian Capital Markets
Equity market indices

Following healthy returns in FY24 and FY25, Indian equities remained under pressures through FY26 with intermittent recoveries proving short-lived amid an adverse global backdrop. Trade tensions, tariff escalation and persistent geopolitical risks, record FPI outflows and rupee depreciation cumulatively weighed on Indian equity markets in FY26.

Notwithstanding the underperformance of Indian equities in recent years, they have outperformed their global peers over the past two decades.

Movement in global equity indices during the last two years (June’2023 = 100)

Source: LSEG Refinitiv, NSE EPR

FPI flows reversed sharply in FY26—after net inflows of USD 4.6 bn in Q1, they turned into sustained sellers, ending the year with outflows of USD 19.7 bn (vs an outflow of USD 14.6 bn in FY25), with March 2026 marking a historic monthly low of USD 12.7 bn. However, this selling pressure was largely offset by strong DII participation, which recorded robust inflows of USD 95.8 bn during FY26, peaking at USD 15.4 bn in March stabilising market. Similarly in April 2026, FPIs continued to remain net sellers at USD -6.5 bn, while DIIs provided strong support with net inflows of USD 5.5 bn, helping cushion market outflows.

Monthly Trends in equity fund flows across FPIs, DIIs and individual investors

Source: NSDL, LSEG Datastream and NSE EPR

Total fund mobilisation remained strong at US$ 161 bn in FY26, marginally lower than US$ 176 bn in FY25. Of the total, fund raising through equity stood at US$ 51 bn during the year while debt raising stood at US$ 107 bn. In CY2025, globally, India led IPO volumes with 367 IPOs, accounting for more than 28% of global listings and ranked third by proceeds at US$ 22.9 bn, reflecting the depth and growing scale of India’s capital markets (Source: EY).

Trends in absolute fund mobilisation across equity, debt and REITs-InvITs in India

Source:SEBI, LSEG Datastream, NSE EPR

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In April 2026, mutual funds saw strong net inflows of US$ 34 bn while AAUM rose to US$ 877 bn, indicating sustained retail participation and market resilience. Equity AAUM is now over 10% of overall Indian equity market.

Trends in net fund flows and average assets under management of mutual funds

Source: AMFI, CMIE Economic Outlook, LSEGH Datastream, NSE EPR

Total demat accounts in India has reached ~ 225 million while the MF folios has set new record of 274 million as of March 2026.

Trends in number of demat accounts and MF folios

Source: CMIE Economic Outlook, NSE EPR

Trends in number of demat accounts and MF folios

Source: MSCI Index Factsheet