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The milestone is well within the reach given the fact that the total number of demat accounts increased to 192.4 million in FY25, registering a 27.1 percent increase. As India has emerged as the fourth largest economy surpassing Japan, capital markets are offering the much-needed platform to the retail traders to become a part of the India growth story.
Small cities, big numbers
What makes the growth story even more compelling is that the tier-2 and tier-3 cities are driving the growth of the demat accounts. As per an estimate, tier-2 and tier-3 cities account for more than 50 percent of these new accounts and the average monthly additions stood at 3.42 million.
As per the recent BSE data, share of the cities beyond top cities in the cash market turnover on BSE has increased from 18 percent to 32 percent between FY14 and FY24.
According to the NSE data, as of April 11, 2025, the number of traders accounts exceeded 22 crore (220 million), with 2 crore accounts being added in just six months since October 2024. This surge is primarily driven by retail traders from Tier 2 and 3 cities.
Moreover, individual participation in NSE’s equity derivatives segment rose YoY from 16.5% in April 2024 to 26.4 percent in April 2025 — marking a sharp 900 basis points (or 9%) increase, indicating rising confidence and activity among retail traders, particularly from non-metro regions. Regions previously underrepresented in the investment domain are now emerging as significant contributors.
The growth of active capital market participants in small towns – majorly young generations, working professionals, households and business owners and traders – underlines a definitive shift in the investment philosophy.
It reflects the growing appetite for long-term financial planning and wealth creation and a stronger interest in equity markets over other conventional asset classes such as gold, real estate and fixed deposits. It was pretty clear long before that equity participation of the retail traders will grow stronger with time.
The growth catalysts
Multiple factors are driving the growth of retail traders in the non-metro cities. The key ones are easy availability of low-cost smartphones and cheap data, strong internet network, growing popularity of equity as asset class, financial literacy, disposable income, etc.
What’s particularly noteworthy is the widening traders base ranging from homemakers to small kirana shop owners. Many of them from cities like Raipur in Chhattisgarh, Kochi in Kerala, Ranga Reddy in Telangana, Bhopal in Madhya Pradesh, etc., invest regularly through SIPs and actively track market trends. Streamlined Know Your Customer processes have also reduced barriers to entry for new traders.
Another important driver is the growing maturity of traders from these cities. Thanks to wider availability of knowledge-based content on capital markets on social media in regional languages and deeper geographical penetration of financial literacy initiatives undertaken by stock exchanges and market regulators, they now have a fair amount of understanding on the cyclicality of the markets and are more inclined towards seizing the trading opportunities.
Digital platforms, local playbook
Online stock broking platforms are also playing the role of a critical enabler by modifying their service models to cater to the unique needs of traders in Tier 2 and 3 cities. They focus on user-friendly digital platforms and localised customer support to bridge service gaps and offer tailored investment solutions in underserved markets.
As a result, there has been a surge of new generation tech-savvy traders who are reshaping the trading landscape. There’s a notable surge in assets under management for direct mutual fund plans, largely driven by these traders who prefer digital-first investment approaches.
The access to capital markets is no longer limited to urban centres. A new wave of retail participation is rising from Tier 2 and 3 cities, powered by digital convenience, increasing awareness, and an aspiration for financial growth through equity investment and trading.
India’s unique investor base on NSE grew from 5.94 crore in FY22 to 11.38 crore by Apr ’25—an increase of 91 percent in just 3 years. This explosive rise demonstrates deepening market inclusion, driven by digital platforms, vernacular content, and rising financial awareness across non-metro India. The small towns are no longer passive spectators as India’s economic story unfolds. In fact, they are writing it and are part of it.
The next 100 million traders will come not from Mumbai or Delhi, but from towns like Ranchi, Surat or Kozhikode where ambition meets access. The next 100 million traders will not just participate in markets; they will redefine them.
Therefore, it is imperative for the policy makers in the government to pave the way for building the right infrastructure – digital, educational, and regulatory to support this wave.
(The author, Gagan Singla is MD, Blinkx – JM Financial. Views are own)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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