Retail flood propels delivery-based trades to a record
Inflows from mutual funds and direct investments by retail investors have driven delivery to traded volumes to a record 31% so far this fiscal year, up from an average of 20% in the previous five years.
Cash delivery volumes on India's largest stock exchange surged more than 50% to a record in the current fiscal year, driven by unprecedented retail flows. Market experts predict the trend will only accelerate as more household savings flood into Indian equities.
The average delivery to traded volumes on the National Stock Exchange (NSE) rose to 31% in the April to October period of FY26, according to its data. That surpassed the yearly average of 20% in the past five fiscals from FY21 to FY25. NSE had a 92.2% share in the equities cash market as of the end of October, with rival BSE accounting for the remainder.
Simply put, if 100 shares have been traded so far this fiscal year, 31 have changed hands, while participants have squared off the rest. Between FY21 and FY25, 20 shares changed hands on average, while 80 were squared off within the market hours, from 9:15am to 3:30pm, Monday through Friday.
“Growing retail interest in stocks is fuelling the rise of delivery-based buying in our markets," said Nilesh Shah, managing director & chief executive officer of Kotak Mahindra Asset Management Co. "SIP (systematic investment plan) and sustained buying by retail through mutual funds and directly is likely to keep the tempo of deliveries at current levels ."
Rise of retail
Mutual fund-led domestic institutional investors (DIIs) have net purchased shares worth ₹4.4 trillion in the fiscal year through October, while foreign portfolio investors (FPIs) offloaded shares worth ₹ ₹64,520 crore, shows BSE data. Domestic buying enabled the Nifty to recover 18% from a multi-year low of 21,743.65 on 7 April to a close of 25,722.10 by the end of October.
In FY25, DIIs invested a record ₹6.1 trillion, while FPIs net sold cash shares, largely in the second half, worth ₹2.4 trillion. Buying in the first half drove a 17% rally in Nifty from April 2024 to a record 26,277.35 on 27 September. However, FPI selling caused the benchmark to slip 17% to a low of 21,743.65 by 7 April this year .
Given the average monthly inflows of almost ₹63,000 crore in the seven months of the current fiscal year, DII investments could hit a record ₹7.5 trillion in FY26. This could keep delivery volumes elevated despite FPI selling.
"The financialisation of household assets is only going to increase, with the next 5 crore folios (investor accounts) coming largely from the youth who want to invest in stocks through the SIP route," said Swarup Mohanty, chief executive officer at Mirae Asset Mutual Fund.
Mohanty's claims are backed by RBI data: mutual funds at ₹41.28 trillion accounted for 11.7% of households' total financial assets of ₹352.64 trillion as of FY25. This was up from 8.66% of the total financial assets of ₹199.79 trillion at the end of FY21.
The power of SIP
The number of investor accounts or folios in equity-oriented schemes of mutual funds surged over 2.5 times from 6.6 crore at the end of FY21 to 17.61 crore as of October this year, per data from the Association of Mutual Funds in India (Amfi) .
SIP inflows have surged from ₹96,080 crore in FY21 to ₹1.96 trillion in the current fiscal through October, according to Amfi data.
"The rise in delivery volumes is attributable to a surge in retail participation either directly or through the mutual fund route," said Dinesh Thakkar, chairman and managing director of Angel One, India's third-largest broker by clients. “It stands as testimony to increased investments into the equity markets by Indian households."
Indirect retail inflows through mutual funds have surged over the years–exchange data shows DIIs have net purchased ₹16 trillion in the secondary market between FY21 and FY26 (until October). Meanwhile, NSE data shows that direct retail pumped in ₹4.62 trillion in its cash market between calendar year 2020 and 2025 (until 31 October this year).
HFT slowdown
However, according to a broker, who spoke on the condition of anonymity, a slowdown in trading by high-frequency traders following the market regulator’s crackdown on US firm Jane Street in July has also contributed to the surge in delivery volumes. The Securities and Exchange Board of India (Sebi) has accused the US HFT of manipulating indices like Bank Nifty to make illegal gains in options trading. Jane Street has denied the allegations and challenged Sebi’s 4 July interim order at the Securities Appellate Tribunal .
“HFTs in the course of trading prior to the Sebi order straddled the cash and the derivatives market, resulting in heightened volumes in both segments," the broker quoted earlier said. “But, with a slowdown in such trades, the traded cash volume growth has relatively lagged the delivery volume growth this fiscal."
topics
