The Indian stock market experienced a notable shift in investor behavior during a year characterized by regulatory changes, global geopolitical events, and periods of heightened volatility. While active participation moderated across the industry, the underlying growth in demat accounts reflects the evolving maturity of India's capital markets.

Demat Account Growth Trends

New demat account additions fell by over 20% between December 2024 and November 2025, according to data from depositories. Despite this decline in new additions, the total number of demat accounts expanded by around 15% between December 2024 and January 2025, based on NSE data.

Ankit Jain, Chief Product & Technology Officer at Choice Broking, explained that "volatility impact is visible in 'monthly active' softness and broker-level churn even while total demat counts keep rising. Investors often pause direct equity trading during drawdowns, while systematic MF investing (SIPs) remains more resilient."

Structural Market Evolution

Ambarish Kenghe, Group CEO of Angel One, identified this trend as reflecting "a structural shift; investors are increasingly approaching markets with a longer-term mindset rather than reacting to short-term noise." Market order activity demonstrated strong recovery after touching a low around February, growing over 20% by November.

The growth shows underlying resilience of Indian markets, particularly given continued FII outflows and global uncertainty. Kenghe noted that this rebound "even amid external headwinds, indicates the depth and maturity that India's capital markets are building over time."

Demographic and Geographic Drivers

Several key factors are powering the sustained growth in market participation:

• Geographic Expansion: Growth increasingly driven by tier-2/3/4 and smaller towns
• Digital Access: 24×7 mobile access and local-language content facilitate participation
• Young Demographics: Large share of new accounts from investors under 30
• Technology Integration: Digital onboarding and frictionless KYC compress multi-day processes into minutes

At Angel One, the average age of clients joining the platform is around 29, with many entering markets within their first few years of earning. "They often start with low-ticket investments or small SIPs and gradually increase participation," Kenghe observed.

Investment Behavior Patterns

Jain highlighted distinct patterns in how different investment vehicles engage participants:

Future Growth Outlook

Looking toward 2026, industry leaders expect continued evolution in market participation patterns. Kenghe emphasized that "the story is unlikely to be about more accounts alone. It will be about deeper, more resilient and intelligent participation."

As long as India's macro fundamentals remain strong and household savings continue shifting from physical to financial assets, demat and mutual fund penetration should continue rising. However, Jain cautioned that "the growth slope will track market returns and IPO cadence. A prolonged low-return phase can slow new demat additions and reduce actives, while strong primary market cycles can re-accelerate onboarding."

Indian equity benchmarks opened on a subdued note on Friday as trading resumed after the Christmas holiday, with both indices facing selling pressure amid thin volumes and continued foreign institutional investor outflows. The Sensex declined 220.94 points or 0.26% to ₹85,187.76, while the Nifty fell 60.55 points or 0.23% to 26,081.55 in early trade.

Market Opening and Performance Metrics

The opening levels reflected a more pronounced decline compared to earlier expectations, with market participants attributing the cautious start to mixed global cues and persistent FII selling pressure. The Sensex opened at ₹85,225.28 against its previous close of ₹85,408.70, while the Nifty opened at 26,081.55 compared to its Wednesday close of 26,142.10.

Foreign Investment Outflows Impact Market Sentiment

The negative sentiment was compounded by persistent FII outflows, with foreign investors selling equities worth ₹1,721.00 crore on Wednesday. Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, noted that "sentiment remains fragile amid low holiday volumes, FII selling of ₹1,721.00 crore and lack of strong domestic cues, keeping markets range-bound and volatile."

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, observed that "with only four more trading days left for the year, what looked like a Santa rally, appears to be running out of steam. In the absence of fresh triggers like a US-India trade deal, the market is likely to consolidate around the present levels."

Sectoral Performance and Stock Movements

Among sectoral movements, defence and mining stocks showed resilience in early trade, while pharmaceutical and financial stocks witnessed selling pressure. The divergent performance highlighted selective buying interest in specific sectors despite the overall market weakness.

Technical Analysis and Trading Strategies

Technical analysts advised caution with level-based trading strategies given the current market environment. Shrikant Chouhan, Head Equity Research at Kotak Securities, said, "We believe that the intraday market texture is non-directional; hence, level-based trading would be the ideal strategy for day traders. On the higher side, 26,250/85,750 remains the crucial resistance zone for the bulls, whereas 26,100/85,300 would be the immediate support area."

Aakash Shah, Technical Research Analyst at Choice Equity Broking, highlighted that "India VIX continues to trade near multi-month lows, reflecting very low volatility and suggesting limited intraday swings. This environment favors range-bound trading and buy-on-dips strategies, with strict stop-losses advised amid thin holiday volumes and year-end positioning."

Medium-Term Outlook and Investment Strategy

Despite near-term headwinds, investment strategists remained constructive on the medium-term outlook. Vijayakumar added that "the sustained buying by the cash rich DIIs will support the market and prevent a sharp pull back. The ideal investment strategy for investors now is to remain invested in high quality large caps and slowly accumulate them on declines. A rally in the market in the early stage of 2026 is on the cards."

Ponmudi R, CEO of Enrich Money, noted that global factors remained supportive. "US equities closed at record highs amid holiday-thinned volumes and growing expectations of further interest rate cuts by the US Federal Reserve, while a buoyant tone across Asian markets is providing a supportive global backdrop," he said.

In commodities, precious metals continued their rally with gold and silver approaching record highs on safe-haven demand, while crude oil prices edged higher toward $58.50 per barrel on geopolitical tensions.