Not very long ago, most Indian households trusted fixed deposits, gold, or property more than the stock market. Investing in equities was seen as risky and complicated. But that picture is quietly changing. Today, millions of first-time investors are entering the markets, and mutual funds have become their preferred starting point.
According to Zerodha founder and CEO, Nithin Kamath, this shift marks a deeper and more lasting change in how Indians think about money and investing.
The COVID-19 period turned out to be a turning point for retail participation in the markets. With more people staying at home, learning online, and looking for better returns, many opened their first investment accounts.
Kamath pointed out how sharply participation has increased. “The Indian markets have changed dramatically in the post-pandemic period. The first big change is, of course, the significant increase in new investors. There are over 11 crore unique investors now.”
This growth reflects a broadening of the investor base. People from smaller towns, young professionals, and salaried individuals are now taking interest in equities and market-linked products.
MUTUAL FUNDS BECOMING THE ENTRY POINT FOR BEGINNERS
One of the most noticeable trends is that new investors are choosing mutual funds instead of directly buying shares. Mutual funds offer diversification and professional management, which makes them less intimidating for beginners.
Kamath highlighted this shift clearly. “The other big development is the increase in first-time investors. Mutual funds have become the go-to avenue for new investors entering the markets.”
He also said that despite the rise in overall participation, direct equity ownership has not grown at the same pace.
This suggests that many investors prefer a guided route rather than picking individual stocks on their own.
GRADUAL SHIFT AWAY FROM TRADITIONAL SAVINGS OPTIONS
For decades, fixed deposits and real estate were considered the safest and most reliable investments in India. While these options remain popular, there are early signs that some savings are moving towards market-linked instruments.
Kamath observed this transition cautiously. “It’s early days, but there are noticeable shifts away from FDs, real estate, etc.”
This does not mean traditional assets are disappearing, but younger investors appear more open to diversifying into equities and mutual funds.
According to Kamath, wider participation in financial markets can strengthen the country’s economic foundation. As companies raise capital and investors seek better returns, the overall system becomes more robust.
He added that deeper markets will be important in the years ahead. “Considering the unstable and closed-off world we are heading into and the massive investments needed in the future, this ‘deepening’ of the markets is a good thing.”
Simply put, as more Indians take their first steps into investing, the shift appears less like a short-term trend and more like a gradual change in mindset. Mutual funds are acting as a bridge for new investors, helping them move beyond traditional savings. If this participation continues to widen, it could reshape how households build wealth and how India’s financial markets grow in the years ahead.
