Northeast States Lead Investor Growth In 2025: NSE Annual Report

India’s equity markets in 2025 saw a quiet but decisive shift in their underlying base. While benchmark indices held steady and market capitalisation expanded, the most striking trend emerged far from Dalal Street in the Northeast and smaller states, which recorded the fastest growth in new investor registrations.

According to data from the National Stock Exchange report, India added 1.5 crore new equity investors in 2025, taking the total number of registered investors to 12.4 crore. States in the Northeast including Mizoram, Arunachal Pradesh, Nagaland, Meghalaya and Tripura posted some of the highest percentage growth rates, albeit from a smaller base. Mizoram saw investor growth of over 30%, while Arunachal Pradesh and Meghalaya recorded growth of more than 25%. This expansion was not limited to the Northeast. Large states such as Uttar Pradesh, Maharashtra, Gujarat and Tamil Nadu led in absolute additions underscoring how equity participation is deepening both geographically and demographically.

However, this surge in registrations came with a paradox.

Despite the sharp rise in investor numbers, retail trading activity actually declined in 2025. The number of individual investors who traded at least once in the equity cash segment fell by over 9% year-on-year, while participation in equity derivatives dropped sharply by more than 26%.

Market participants say this reflects a shift in retail behaviour. After years of high-volatility trading and strong post-pandemic rallies, investors appear to be turning more cautious choosing to stay invested rather than trade frequently, especially amid uneven market performance and heightened valuation concerns.

The trend also suggests that many new investors entering the market particularly from smaller towns and states may be approaching equities with a longer-term investment mindset, rather than short-term speculation, says the NSE report.

While participation broadened, market performance remained selective. The market capitalisation of NSE-listed companies rose 6.8% in 2025 to Rs 469 lakh crore, reflecting continued confidence in equities as a store of value. India’s market cap-to-GDP ratio stayed elevated at 136%, highlighting the growing role of equities in household and institutional portfolios.

Yet, returns were far from evenly distributed. The Nifty 50 gained 9.8% during the year, significantly outperforming broader indices. The Nifty Midcap 150 rose a modest 4.8%, while the Nifty Smallcap 250 declined 7.6%, marking a sharp reversal after years of strong outperformance.

This divergence underscored a clear change in market leadership. Investors increasingly favoured large, liquid companies with stable earnings, as volatility, tighter financial conditions and earnings uncertainty weighed on smaller stocks.

One of the strongest stabilising forces in 2025 was the dominance of domestic institutional investors. Domestic institutional investors (DIIs) poured a record Rs 7.6 lakh crore into Indian equities during the year, providing a strong counterbalance to global volatility.

In contrast, foreign portfolio investors (FPIs) were net sellers, pulling out nearly Rs 1.6 lakh crore from Indian equities. Global interest rate uncertainty, geopolitical risks and shifting capital flows weighed on foreign sentiment.

The growing influence of domestic money via mutual funds, insurance companies and pension funds helped markets absorb foreign outflows and limit downside volatility, reinforcing India’s increasing financial self-reliance.

Despite uneven returns and lower trading activity, long-term wealth creation continued. Since April 2020, net household wealth accretion in Indian equities has crossed Rs 53 lakh crore, underscoring the resilience of equities as a long-term savings vehicle.