National Stock Exchange (NSE) of India has hit a major milestone, with its unique investor base, represented by unique Permanent Account Numbers (PANs), surpassing 11 crore for the first time. The total number of client accounts registered with the exchange has now exceeded 21 crore. This significant growth reflects a surge in stock market participation, with the number of investor registrations increasing 3.6 times in the past five years.
When the NSE first began operations in 1994, it took 14 years to reach 1 crore investors. The pace then accelerated, with the second crore added in about seven years, and the third crore coming in just 3.5 years. In the past year, the addition of each crore of investors has happened more quickly, with a new crore of registrations being added roughly every 6-7 months. The most recent crore was added in just over five months, highlighting a major shift in investor enthusiasm and direct participation in the stock market.
According to the NSE, in the last five months alone, daily registrations of new unique investors have ranged from 47,000 to 73,000. This surge in interest can be attributed to several factors, including strong stock market performance, increased investor awareness, government financial inclusion efforts, and the rapid digitalisation of financial services.
In 2024, the Nifty 50 index delivered an 9% return, while the Nifty 500 saw a more impressive 15% gain. Indian markets have delivered positive returns for nine consecutive years, boosting investor confidence. Over the past five years, both the Nifty 50 and Nifty 500 have posted annualised returns of 14% and 18%, respectively, further fueling interest in stock market participation.
The market capitalisation of companies listed on the NSE has grown substantially, increasing nearly sixfold from Rs 73.5 lakh crore in May 2014 to Rs 425 lakh crore today.
However, despite the growth in investor participation, Indian stocks have recently experienced a decline, with the NSE Nifty 50 Index dropping 1.4%, reaching 23,024 on Tuesday, 21st January. This marks a 12% decrease from its September peak and shows that Indian stocks are underperforming compared to other Asian markets. Corporate earnings have failed to boost investor confidence, and concerns about slow growth, weak consumption, and sluggish earnings have led to fears over India‘s economic outlook.
In a related development, of the 75 million individuals who filed tax returns in India, 63% (approximately 47 million) paid no taxes. Meanwhile, around 40,000 high-income earners contributed less than 20% of the total tax revenue, despite each paying at least $100,000 in taxes. This has sparked a wider debate about the need for tax reform, as only 7% of India’s population files tax returns.
Foreign investors have also been pulling out of the Indian market, with a net outflow of $5.4 billion in January, marking one of the worst starts to the year. The Nifty 50 Index has seen a significant decline, contributing to concerns about the overall performance of the Indian stock market and economy.
