Indian equity markets driven by democratisation of access and information: BSE CEO Sundararaman Ramamurthy

Indian equity markets have witnessed a significant transformation over the past few decades, primarily driven by the democratisation of access and information, according to Sundararaman Ramamurthy, Managing Director & CEO of BSE. While addressing the ASSOCHAM 16th Mutual Fund Summit, he said that regulatory changes had levelled the playing field, making investment information freely available to all, and encouraging widespread participation.

He added that this shift became evident during the Covid-19 pandemic. With more time, many individuals turned to equity markets, resulting in a four-fold increase in investment activity over four years. Assets under management (AUM) of equity mutual funds increased from less than Rs 2 lakh crore to Rs 28 lakh crore, reflecting a growing confidence among retail investors who now collectively hold about 63% of AUM.

Looking ahead to 2047, Ramamurthy said that as India aims to become a developed economy, the equity market’s growth trajectory seems promising. Currently, India’s market capitalisation-to-GDP ratio is considerably lower than that of developed countries. Even at a conservative estimate, this ratio suggests that India’s market cap may touch $40-45 trillion if the economy could expand to $30-35 trillion by 2047, signifying a tremendous opportunity for investors.

“If India will become a developed economy by 2047, as much as 60%-65% of the population will be from income groups and 20%-30% should come to mutual funds,” he said.

However, the BSE chief added that the market landscape needs to evolve. Currently, most investments are concentrated in around 4,500 listed equities, with a small fraction being highly liquid. There is a need to push towards broadening the investment base. 

Furthermore, the data indicates that despite a burgeoning digital ecosystem—1.2 billion internet users, 300 million UPI users and 800 million e-commerce participants—around 40 million individuals are mutual fund investors. This discrepancy highlights a vast untapped market. “By 2047, with a significant segment of the population entering the income-earning bracket, the number of mutual fund subscribers could see a substantial increase with per capita income of $18,000,” he said.

Ramamurthy also said that educating this population, especially women and young earners, about the benefits of mutual funds can drive substantial growth. Gender parity in investment is another area needing attention.

"Advertisements and societal norms often depict investment as a male domain, sidelining women. Changing this narrative is vital. Women should be encouraged to participate actively in financial planning, aligning with ancient Indian principles that hold women and wealth in equal esteem," Ramamurthy said adding there is also a huge scope for mutual fund distributors.  

"We have 1.5 lakh mutual fund distributors, while life insurance companies have 30 lakh distributors," he said.

He also advised the industry to increase passive funds. "We should increase more broad-based indexed funds so that less risky products are available in the market," Ramamurthy said.

Another industry watcher, Munish Sabharwal, Zonal Head (North Region), SBI Funds Management in a panel discussion also highlighted that financial education is missing. "It should be started from the school level, say 8th or 9th class," he said.

While sharing his views on the mutual fund industry, Umeshkumar Mehta, CIO, of Samco Asset Management said, "Today, the mutual fund industry is where the banking industry was 15 years ago. There is a massive scope for innovation in the mutual fund industry. Depth of the industry will become bigger and bigger going ahead."