The Indian financial market has witnessed significant growth throughout 2024, characterized by remarkable expansions across the mutual fund sector, UPI transactions, and capital mobilization by companies. This flourishing environment indicates both increasing investor confidence and the continued financialization of the economy.
According to Shilpi Pandey of New Delhi's Business Insider, the mutual fund industry boomed this year, with total assets under management (AUM) surging to Rs 68 lakh crore by the end of November—representing a staggering 33 percent increase from Rs 50.78 lakh crore at the close of 2023. The industry's growth is attributed to notable inflows, amounting to Rs 9.14 lakh crore, driven significantly by Systematic Investment Plans (SIPs) which have gained remarkable popularity among retail investors.
With 5.6 crore new investors actively participating, the year saw SIPs alone contributing Rs 2.4 lakh crore to the AUM, reflecting changing savings behavior among the populace. Ganesh Mohan, CEO of Bajaj Finserv AMC, noted, "The growing trend of financialisation has led to significant growth..." underscoring the importance of equity markets and mutual funds for everyday investors.
Equity schemes took the lead among investment options, attracting Rs 3.53 lakh crore, supported by continued confidence demonstrated through SIPs which maintained monthly contributions exceeding Rs 25,000 crore.
Akhil Chaturvedi, ED & CBO at Motilal Oswal AMC, commented, "Investment through SIP... has become the default nature of investing for predominant Indian investors," highlighting the preference for long-term, disciplined investment strategies.
The overall mutual fund growth was not the only story of the year. UPI QR transactions surged by 33 percent, especially noticeable in rural and semi-urban regions. A report by PayNearby noted an impressive increase of 297 percent across credit product transactions, reflecting growing financial awareness and demand.
Insurance policy purchases and premium collections also skyrocketed, with transaction volumes increasing by 127 percent and new customer adoption seeing remarkable growth of 96 percent. Anand Kumar Bajaj, Founder and CEO of PayNearby, stated, "By equipping local retailers with tools to offer diverse services..." showcasing how these small outlets are pivotal for enhancing financial access.
Meanwhile, the capital mobilization through markets experienced phenomenal growth, with funds raised climbing from Rs 12,068 crore in 2014 to Rs 1.21 lakh crore this fiscal year until October. This substantial rise underscored the increasing strength of India's economy and investor sentiment. According to the State Bank of India, "A higher market capitalisation signals..." healthy economic conditions and investor faith.
Today, the total market capitalisation of the National Stock Exchange has expanded over six times since FY14, reaching Rs 441 lakh crore. The increased participation of households reflects this trend, with savings dedicated to shares and debentures rising significantly—from 0.2 percent of GDP to around 1 percent—indicating stronger financial engagement.
The upward trend also highlights the successful efforts of financial regulators to cultivate the mutual fund sector and deepen market outreach. Sebi introduced several initiatives, including the MF Lite framework, to simplify establishing asset management companies and attract newer players.
With these exciting developments, the Indian financial market is expected to maintain its upward momentum as we head toward 2025. The blend of increased investor participation, the role of technology, and regulatory support paints a bright picture for the future.
Overall, trends from 2024 suggest growing financial literacy, accessibility, and investor engagement, indicating the Indian financial market is on the cusp of even greater expansion.
