Share of Indian households' investment in stock market may grow 4x by 2035

The share of Indian households' investments flowing into capital markets could quadruple over the next decade, creating a larger pool of domestic capital for equities and debt while benefiting exchanges, depositories and asset managers, according to the BlackRock Investment Institute.

Ben Powell, Chief APAC & Middle East Investment Strategist at BlackRock Investment Institute, said the firm expects Indian households to channel a much larger share of their savings into financial assets such as stocks and bonds between 2026 and 2035. The shift, if realised, could provide sustained domestic liquidity even as foreign investors remain cautious in the near term.

BlackRock estimates that, of every $100 Indian households added to their physical and financial assets between 2016 and 2025, only about $5 went into shares, investment funds and debt securities. This figure could rise to around $20 between 2026 and 2035, marking a fourfold increase in the share allocated to capital markets.

The projection comes as passive investing continues to gain traction in India. Passive mutual fund assets under management (AUM) stood at ₹14.7 lakh crore ($155 billion) at the end of September 2026, an eight-fold jump from ₹1.91 lakh crore ($22.9 billion) in 2019, according to Tata Mutual Fund data. Equity-oriented index funds account for ₹2.4 lakh crore of the ₹3.2 lakh crore invested in index funds.

Passive funds now account for nearly 18% of the mutual fund industry's AUM, compared with about 7% in 2020. The growing preference for low-cost passive products suggests a significant portion of incremental household investments is already flowing into index-linked vehicles.

BlackRock believes India's structural shift towards financial assets will provide an additional source of long-term funding for the economy. "We're still structurally overweight on India on a strategic horizon," Powell said.

He said the discussion is no longer only about India's economic growth but also about how that growth will be financed amid rising global demand for capital.

Global competition for capital has intensified as governments continue to run large deficits while artificial intelligence infrastructure requires billions of dollars of fresh investment. "If India can mobilise more of its household savings, that should lead to a win-win — a win for investors and also a win for the Indian economy because that's a fantastic source of funding," he said.

Foreign investors still cautious

While BlackRock remains constructive on India's long-term prospects, Powell said overseas investors are likely to stay on the sidelines until uncertainty around the US midterm elections and geopolitical tensions in West Asia eases.

"I think the foreigners will continue to wait and see until we get through the US midterms," Powell said.

He added that once political uncertainty reduces, India is likely to remain among the preferred destinations for global investors because of its earnings growth and economic outlook.

"As we look around the world for growth opportunities, great companies and so forth, India is clearly on the list."

For the full interview, watch the accompanying video

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