From speculative stock-picking to long-term discipline, how retail investors are shifting their focus
On the growing role of passive investing, the brokerage said retail investors are increasingly prioritising asset allocation over individual stock selection.
- Apr 1, 2026,
- Updated Apr 1, 2026 5:31 PM IST
India's retail investing landscape is undergoing a structural shift, driven by rising financial awareness, expanding digital infrastructure and a growing preference for disciplined, long-term strategies, according to Religare Broking.
On the growing role of passive investing, the brokerage said retail investors are increasingly prioritising asset allocation over individual stock selection. "The Indian retail investor has matured from chasing elusive alpha to embracing the efficiency of market beta. We are witnessing a structural pivot from a 'selection' mindset to an 'allocation' mindset."
According to AMFI data for February 2026, passive investing continues to gain traction, with a record 5.57 crore folios in the 'others' category, which includes index funds and ETFs. Passive assets under management (AUM) have risen to Rs 15.23 lakh crore, accounting for nearly 19 per cent of total industry assets, up from around 10 per cent five years ago, implying a strong 37 per cent CAGR since 2021.
The brokerage added that while actively managed funds remain a core portfolio component, adoption of smart beta and factor-based strategies such as Quality, Value and Momentum is rising as investors increasingly prefer transparent, rule-based investing frameworks. "Investors are no longer treating the market as a speculative gamble but as a transparent, rule-based foundation for long-term wealth," it said.
Religare highlighted that India's digital infrastructure is significantly improving access across fintech, wealth and insurance segments by making financial services paperless, presence-less and cashless. With Aadhaar enabling instant e-KYC for over 1.3 billion users, onboarding across platforms has become nearly instantaneous, while UPI processes more than 10 billion transactions each month, facilitating real-time payments for investments, premium payments and claims.
This ecosystem has supported the opening of over 150 million demat accounts and monthly SIP inflows exceeding Rs 30,000 crore, indicating growing retail participation in capital markets. Digital insurance platforms are also helping improve penetration through simplified policy purchase, comparison and faster claims settlement. The brokerage noted that a first-time user can now download an app, complete Aadhaar-based KYC, invest in mutual funds and even purchase insurance or pay premiums via UPI within minutes, highlighting how scale and convenience are driving financial inclusion.
Systematic Investment Plans (SIPs) have also emerged as a key stabilising force for markets amid volatility. Religare noted that monthly SIP contributions reached a record Rs 31,002 crore in early 2026, providing consistent domestic liquidity even during phases of global uncertainty. With SIP AUM now accounting for over 20 per cent of industry assets, this steady flow of capital acts as a counter-balance to foreign portfolio investor (FPI) outflows.
However, the brokerage cautioned that sustaining this momentum in Tier 2 and Tier 3 cities will require continued improvements in financial literacy and trust-building at the local level to ensure long-term investment discipline is maintained.
Hybrid and Balanced Advantage Funds (BAFs) are also witnessing rising traction as investors look for built-in diversification and automatic portfolio rebalancing without immediate tax implications.
"By utilising internal, regulatory-compliant models to rebalance between equity and debt, these funds remove the 'emotional tax' of market timing. They allow investors to capture upside during rallies while maintaining a built-in floor during drawdowns, effectively institutionalising discipline for the masses," the brokerage added.
India's retail investing landscape is undergoing a structural shift, driven by rising financial awareness, expanding digital infrastructure and a growing preference for disciplined, long-term strategies, according to Religare Broking.
On the growing role of passive investing, the brokerage said retail investors are increasingly prioritising asset allocation over individual stock selection. "The Indian retail investor has matured from chasing elusive alpha to embracing the efficiency of market beta. We are witnessing a structural pivot from a 'selection' mindset to an 'allocation' mindset."
According to AMFI data for February 2026, passive investing continues to gain traction, with a record 5.57 crore folios in the 'others' category, which includes index funds and ETFs. Passive assets under management (AUM) have risen to Rs 15.23 lakh crore, accounting for nearly 19 per cent of total industry assets, up from around 10 per cent five years ago, implying a strong 37 per cent CAGR since 2021.
The brokerage added that while actively managed funds remain a core portfolio component, adoption of smart beta and factor-based strategies such as Quality, Value and Momentum is rising as investors increasingly prefer transparent, rule-based investing frameworks. "Investors are no longer treating the market as a speculative gamble but as a transparent, rule-based foundation for long-term wealth," it said.
Religare highlighted that India's digital infrastructure is significantly improving access across fintech, wealth and insurance segments by making financial services paperless, presence-less and cashless. With Aadhaar enabling instant e-KYC for over 1.3 billion users, onboarding across platforms has become nearly instantaneous, while UPI processes more than 10 billion transactions each month, facilitating real-time payments for investments, premium payments and claims.
This ecosystem has supported the opening of over 150 million demat accounts and monthly SIP inflows exceeding Rs 30,000 crore, indicating growing retail participation in capital markets. Digital insurance platforms are also helping improve penetration through simplified policy purchase, comparison and faster claims settlement. The brokerage noted that a first-time user can now download an app, complete Aadhaar-based KYC, invest in mutual funds and even purchase insurance or pay premiums via UPI within minutes, highlighting how scale and convenience are driving financial inclusion.
Systematic Investment Plans (SIPs) have also emerged as a key stabilising force for markets amid volatility. Religare noted that monthly SIP contributions reached a record Rs 31,002 crore in early 2026, providing consistent domestic liquidity even during phases of global uncertainty. With SIP AUM now accounting for over 20 per cent of industry assets, this steady flow of capital acts as a counter-balance to foreign portfolio investor (FPI) outflows.
However, the brokerage cautioned that sustaining this momentum in Tier 2 and Tier 3 cities will require continued improvements in financial literacy and trust-building at the local level to ensure long-term investment discipline is maintained.
Hybrid and Balanced Advantage Funds (BAFs) are also witnessing rising traction as investors look for built-in diversification and automatic portfolio rebalancing without immediate tax implications.
"By utilising internal, regulatory-compliant models to rebalance between equity and debt, these funds remove the 'emotional tax' of market timing. They allow investors to capture upside during rallies while maintaining a built-in floor during drawdowns, effectively institutionalising discipline for the masses," the brokerage added.