Record Surge in Delivery-Based Trading as Retail Investors Flood Markets
India's stock markets are witnessing an unprecedented transformation as delivery-based trading volumes surge to record levels, driven by massive retail participation through both direct investments and mutual funds. The National Stock Exchange (NSE) has reported that delivery to traded volumes reached 31% during the April to October period of FY26, significantly higher than the 20% average maintained over the previous five fiscal years from FY21 to FY25.
This remarkable shift indicates a fundamental change in market behavior, where more investors are taking actual delivery of shares rather than engaging in intraday speculation. To put this in perspective, for every 100 shares traded so far this fiscal year, 31 have actually changed ownership, while the remaining 69 were squared off within market hours.
Domestic Institutional Investors Drive Market Momentum
The driving force behind this transformation comes from domestic institutional investors (DIIs), primarily mutual funds, which have made net purchases worth ₹4.4 trillion in the fiscal year through October. This massive domestic buying has more than compensated for foreign portfolio investors (FPIs) who offloaded shares worth ₹64,520 crore during the same period.
This domestic support proved crucial for market stability. The Nifty index recovered impressively by 18% from its multi-year low of 21,743.65 on April 7 to reach 25,722.10 by the end of October. The contrast with the previous fiscal year is striking - in FY25, DIIs invested a record ₹6.1 trillion while FPIs net sold cash shares worth ₹2.4 trillion, largely in the second half.
Market experts predict this trend will only intensify. Nilesh Shah, Managing Director & CEO of Kotak Mahindra Asset Management Co., emphasized that "growing retail interest in stocks is fuelling the rise of delivery-based buying in our markets. SIP and sustained buying by retail through mutual funds and directly is likely to keep the tempo of deliveries at current levels."
SIP Revolution Transforms Investment Landscape
The systematic investment plan (SIP) phenomenon has emerged as the backbone of this retail revolution. Data from the Association of Mutual Funds in India (Amfi) reveals explosive growth in investor participation. The number of investor accounts in equity-oriented mutual fund schemes has surged over 2.5 times from 6.6 crore at the end of FY21 to 17.61 crore as of October this year.
SIP inflows tell an even more compelling story. Investments through this route have skyrocketed from ₹96,080 crore in FY21 to ₹1.96 trillion in the current fiscal through October. This represents one of the most significant financial transformations in recent Indian economic history.
Swarup Mohanty, CEO at Mirae Asset Mutual Fund, highlighted the demographic shift driving this change: "The financialisation of household assets is only going to increase, with the next 5 crore folios coming largely from the youth who want to invest in stocks through the SIP route."
Reserve Bank of India data confirms this structural shift. Mutual funds now account for 11.7% of households' total financial assets, amounting to ₹41.28 trillion of the total ₹352.64 trillion as of FY25. This represents substantial growth from 8.66% of total financial assets of ₹199.79 trillion at the end of FY21.
Direct Retail Participation and Market Impact
Beyond mutual funds, direct retail investment has also contributed significantly to the delivery volume surge. Dinesh Thakkar, Chairman and Managing Director of Angel One, India's third-largest broker by clients, noted that "the rise in delivery volumes is attributable to a surge in retail participation either directly or through the mutual fund route. It stands as testimony to increased investments into the equity markets by Indian households."
The numbers substantiate this claim. Exchange data shows that DIIs have net purchased ₹16 trillion in the secondary market between FY21 and FY26 (until October). Meanwhile, NSE data reveals that direct retail investors pumped in ₹4.62 trillion in its cash market between calendar year 2020 and 2025 (until October 31 this year).
Another factor contributing to higher delivery volumes has been the slowdown in high-frequency trading (HFT) activity. According to a broker who spoke anonymously, the market regulator's crackdown on US firm Jane Street in July has reduced HFT volumes. The Securities and Exchange Board of India (Sebi) accused the US HFT firm of manipulating indices like Bank Nifty to make illegal gains in options trading. Jane Street has denied these allegations and challenged Sebi's July 4 interim order at the Securities Appellate Tribunal.
The broker explained that "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. But, with a slowdown in such trades, the traded cash volume growth has relatively lagged the delivery volume growth this fiscal."
Looking ahead, with average monthly inflows of nearly ₹63,000 crore in the first seven months of the current fiscal year, DII investments could reach a record ₹7.5 trillion in FY26. This sustained domestic support is expected to maintain elevated delivery volumes despite ongoing FPI selling, signaling a new era of retail-dominated equity markets in India.
