BT MindRush: Around 23% of Indian households invest in equities, outpacing France & Germany, says Ashish Chauhan of NSE

Equity investing in India has undergone a radical transformation over the past few decades. Ashish Chauhan, MD and CEO of the National Stock Exchange (NSE), sees this as a fundamental shift in mindset. "The rise of the equity cult in India is now undeniable," he asserts at the India's Best CEOs event organised by Business Today in Mumbai. 

A testament to this change is the vast reach of the NSE. "We have more than 19,300-19,400 PIN codes in India, and we are not there in just 28 PIN codes," Chauhan explains. This ubiquitous presence reflects the surge in market participation. "When I joined in 1991-92, there were around a million investors in stock markets. Today, there are 11 crore unique investors. That is literally 110 times more people."

The biggest driver of this phenomenon, Chauhan believes, is trust. "There is a theory in economics that low per capita income countries do not have good equity markets because poor people cannot save. But in India, we see something extraordinary—people are investing their hard-earned savings in businesses they may never physically see. A woman in Jorhat, Assam, trusts an entrepreneur in Salem, Tamil Nadu, with her money. That, for me, is the most significant achievement of India's 78 years of independence: the trust between ordinary Indians and their entrepreneurs."

This trust, he argues, places India ahead of even some developed nations. "22-23% of all households in India now invest in equities, either directly or through mutual funds. This percentage is higher than in France or Germany. Indians, in fact, trust their entrepreneurs more than people in some developed nations trust theirs."

But what has enabled this extraordinary shift? Chauhan points out that the technological advancement, coupled with regulatory changes, has further democratized investing. "In 2014, India had 1.6 crore investors. By the time COVID started, we had 2.5 crore investors. Today, we have 11 crore. The marginal cost of servicing an investor has become nearly zero, and video KYC has allowed brokers to reach the hinterlands."
Chauhan remains optimistic about India's equity markets, emphasizing their role in wealth creation. "Stock markets are not just about trading; they are about channeling savings into productive capital. Regulators will continue making tough decisions, but those decisions will ensure more trust and participation in the long run."
He acknowledged that while SEBI’s reforms were still evolving, they had effectively curbed speculative options trading. “The volumes, in terms of the number of contracts, have gone down by 50-60%, while the premium traded has also decreased by 25-30%. That was the purpose—to break the momentum,”he explained.  
On IPOs, Chauhan noted that their frequency depends on market conditions. “When markets are strong, IPOs flourish. In weaker conditions, companies delay their listings,” he said. He also addressed concerns about loss-making firms raising capital, comparing them to Amazon’s long journey to profitability. “It’s about potential. Some will succeed, others won’t,” he added.  

Discussing FIIs, he linked their movements to U.S. interest rates and global uncertainty. “When U.S. rates rise, FIIs withdraw from emerging markets,” he explained. However, he pointed out that domestic investors were becoming a stabilizing force.