Household Equity Wealth Declines in Fiscal Year 2026, Yet Maintains Strong Gains Since 2020

Indian Households Lose Rs 12.6 Lakh Crore in Equity Wealth During March Quarter

The National Stock Exchange (NSE) has published its latest Market Pulse report, revealing that Indian households saw their equity wealth shrink by around Rs 12.6 lakh crore during the March 2026 quarter. This decline was primarily driven by a sharp correction in domestic markets, which eroded both direct stock holdings and indirect exposure through mutual funds. The report attributed the market volatility to sustained foreign investor outflows, geopolitical tensions in West Asia, rising crude oil prices, and concerns over inflationary pressures globally.

Despite the sharp quarterly erosion, household participation in equities remains structurally strong, with cumulative wealth creation since April 2020 still estimated at around Rs 44 lakh crore. The NSE noted that individuals continue to maintain significant exposure to equities both directly and through systematic investments into mutual funds.

The Indian equities market partially recovered in April after the steep March correction. The Nifty 50 gained 7.5% during the month, its strongest monthly rally in 28 months, helped by improving valuations, domestic liquidity support, and a rebound in global risk sentiment. However, the recovery remained fragile, with renewed concerns over rising crude oil prices, rupee weakness, continued foreign selling, and pressure on IT stocks dragging the benchmark index lower again in the first half of May.

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The NSE report also warned that prolonged geopolitical tensions could further narrow policy flexibility by exerting pressure on inflation, the current account deficit, and capital flows.

Foreign Portfolio Investor Sell-Off and Domestic Institutional Investor Strength

The March quarter saw Foreign Portfolio Investor (FPI) ownership in NSE-listed firms fall to 15.8%, the lowest level in 17 years, following record annual outflows of nearly US$19.6 billion. In contrast, domestic mutual funds continued to gain ground, with their ownership in NSE-listed companies rising to a record 11.4%, marking the eleventh consecutive quarter of all-time highs. Overall domestic institutional investor (DII) ownership climbed to 19.6%, remaining above FPI ownership for the sixth straight quarter, a phenomenon last witnessed in 2003.

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Retail Ownership Weakens, But SIP Flows Remain Resilient

Direct individual ownership in listed companies slipped to a five-year low of 9.1% during the quarter. However, when indirect holdings through mutual funds are included, individuals still accounted for 18.7% of the market, close to the peak levels recorded in September 2025. The resilience, according to the report, has been aided by sustained flows into mutual funds through systematic investment plans (SIPs). Domestic institutional investors extended their buying streak to 33 consecutive months in April, supported by strong SIP inflows and continued retail participation.