Analysis of Investor Perception and Decision Making in Indian Stock Markets

Over the last three decades, the Indian stock market has transformed from a closed, paper-based
trading system into one of the most dynamic and technologically advanced in the world.
Liberalization in the early 1990s and the establishment of the Securities and Exchange Board of
India (SEBI) as the principal regulator greatly improved market transparency and efficiency. Critical
reforms such as dematerialized accounts, electronic trading, and online brokerage platforms have
simplified equity investing for millions of Indians. By January 2023, India became one of the first
major markets to fully implement a next-day trade settlement cycle (T+1), underscoring its
operational advancement.
Both individual and institutional investors (mutual funds, pension funds, foreign portfolio investors,
etc.) have significantly contributed to India’s capital markets over the years. The emergence of
fintech solutions and discount brokers (e.g., Zerodha, Groww, Upstox) expanded stock market
participation beyond major metros into Tier-2 and Tier-3 cities. A new generation of young, tech
savvy retail investors has risen, engaging actively in stocks, mutual funds, and ETFs via
democratized digital platforms. For instance, India’s demat accounts have exploded from about 3.6
crore in March 2020 to over 16 crore by mid-2024, and further beyond 20 crore by mid-2025. This
represents nearly a five-fold increase in five years, driven largely by youth investors and accessible
technology. Such investors now account for more than half of daily trades, drastically reshaping
market dynamics. The chart below illustrates the remarkable growth of demat accounts in India,
highlighting the post-2020 surge: