India’s Capital Market Infrastructure Sector Generates Over Rs 700 Billion in FY25: Report

India’s capital market infrastructure sector, which includes brokers, stock exchanges, depositories, and registry and transfer agents (RTAs), produced revenues exceeding Rs 700 billion in FY25, as per a report by global brokerage Jefferies. The revenue growth was driven by increased market volumes and higher investor involvement. The sector’s future prospects will be influenced by accelerated growth in specific segments, expansion into related businesses, and adaptability to regulatory modifications.
Jefferies forecasts a 16% compound annual growth rate for mutual fund assets under management (AUM) from FY26 to FY28, with mutual fund AUM expected to climb from Rs 67 trillion in FY25 to Rs 103 trillion by FY28. The report also predicts a 15% growth in cash market average daily turnover (ADTO) and a 12% rise in F&O premium ADTO, reflecting a slowdown in derivatives activity following recent regulatory adjustments.
The brokerage anticipates a surge in the number of demat accounts from 192 million in FY25 to 304 million by FY28, and mutual fund folios to increase from 235 million to 377 million. Brokers contributed nearly Rs 500 billion to the FY25 revenues, while exchanges accounted for about Rs 200 billion, with depositories and registry and transfer agents making up the remainder. Brokers and exchanges are projected to grow at a faster pace compared to other segments within the capital market infrastructure.
The growth of stock exchanges will be fueled by increased interest in index options, expected to capture approximately 35% of the options market by FY28. Brokers are set to expand their operations across various products such as margin trading facilities, commodities, bonds, and wealth management, driving their growth.
A significant portion of the market’s incremental participation is being led by younger investors, with individuals below 30 years constituting around 40% of the base in FY25. Analysts suggest that the market is likely to witness a year-end rally, with the rupee’s strong rebound and foreign institutional investors’ cash market purchases potentially accelerating this rally by triggering short covering and pushing benchmark indices higher.