Slowing demat growth masks India's shift to long-term investing

In June, mutual fund SIP inflows rose ₹827 crore, or 3% month-on-month, to ₹31,781 crore from ₹30,954 crore in May, a three-month high. Year-on-year, monthly contributions increased by ₹4,512 crore, or 17%, from ₹27,269 crore in June 2024. The number of contributing SIP accounts stood at 9.78 crore.

“This is not a country losing interest in its markets. It is a country moving its savings into them. For generations we trusted gold, property and fixed deposits. That habit is finally evolving,” Gupta said.

The strongest evidence of India's retail investing surge is showing up in tax returns, not stock market data. A demat account can sit dormant. An ITR-2 tax form cannot. It is filed only when taxpayers have capital gains or other eligible income to report, and those filings are rising sharply, according to ClearTax internal data.

ITR-2 and ITR-3 forms have grown from accounting for about one-sixth of all filings to nearly half in just three years, the data shows. The money did not just enter the market. It stayed, grew, and is now being taxed, Gupta said.

“So a slow year for new accounts does not worry me. The market is filtering out its speculators and retaining the serious, long-term investors. That is the shift that will define the next decade,” he said.