Independence Day Special | How SIP, demat explosion helped India declare independence from foreign money in 2025

India’s markets have snapped the umbilical cord to foreign flows with a retail army and a wall of disciplined SIP money. As demat accounts exploded fivefold in just over five years and monthly SIPs hit record highs, Dalal Street found the firepower to counter fickle foreign flows and rewrite the pecking order of market ownership in March quarter this year.

“Indian markets shall continue their steadfast march towards even more atmanirbharta (self-reliance) in the quarters and years to follow,” said Pranav Haldea, Managing Director, PRIME Database Group. “The day is not too far when the share of MFs alone shall overtake that of FIIs.”

As of June-end, Domestic Institutional Investors (DIIs) held a record 17.82% stake in NSE-listed companies, outstripping the 13-year low 17.04% share of Foreign Institutional Investors (FIIs). Mutual funds, flush with retail SIP inflows, now own 10.56% of the market, which is the highest ever. Combined with retail and HNI holdings, domestic investors control an unprecedented 27.40%, sharply reducing the once-dominant foreign grip, according to data from primeinfobase.com.


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Demat Detonation

This power shift is underpinned by a stunning rise in investor participation. From just 4.1 crore in March 2020, the number of demat accounts has soared to over 20 crore by June 2025 — a fivefold jump in just over five years. The first 23 years of demat account growth were replicated four times over in the past five years alone.

Brokers estimate unique investors, based on PAN, at under 10 crore, but even that is seismic for a country that relied on a narrow investor base for decades. The boom has been driven by under-30 investors, with 4.8 crore “active clients” trading at least once a year.

“The onset of the COVID-19 pandemic in March 2020, which initially triggered a steep market correction, became a catalyst for change as millions of new demat accounts were opened across the country,” said Dr. Poonam Tandon, CIO, IndiaFirst Life Insurance.

Retail investors now account for over half of daily transactions, democratizing wealth creation and ensuring a broader swathe of Indians benefit from the country’s growth story.

SIP Tsunami

Mutual fund SIPs have turned disciplined investing into a mainstream habit. SIP contributions nearly tripled from ₹1,00,084 crore in FY20 to ₹2,89,352 crore in FY25, helping push industry AUM to a record ₹65.74 lakh crore in March 2025, from ₹22.26 lakh crore five years earlier.

“The consistent rise in SIP accounts and a detailed analysis of investment trends indicate a growing preference among investors for disciplined, long-term investing over short-term speculation,” said AMFI CEO Venkat N. Chalasani.

Individual investors, including HNIs, retail and NRIs, now hold 63.2% of mutual fund AUM, turning these vehicles into the backbone of domestic market firepower.

For decades, FIIs were the largest non-promoter shareholders in India, their buy/sell decisions swaying market sentiment. Today, the tide has turned. With domestic inflows now providing a counterweight, the market is less hostage to foreign whims.

As Haldea put it, “While FIIs continue to remain an important constituent, their stranglehold on the Indian capital market has come down.”

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)