Dissecting the Indian Capital Market Ecosystem and the Underlying Opportunity

When we talk about investing in India's growth story, most of us think about picking the right stock or the right fund. We think about what to put our money into, but rarely do we think about the machinery that runs the show. That is, the exchanges, the depositories, the asset managers, and the brokers. The reality is that these companies that earn every time we trade, invest, or simply stay invested.

Have we piqued your curiosity? Let’s understand all about how markets work and who benefits when they grow, and whether owning a slice of that is worth considering.

How Capital Markets Actually Work

Capital markets move money from people who wish to invest into businesses and governments who accept these investments for various purposes. To say it simply:

• Providers: Individual investors, HNIs, mutual funds, pension funds, and FPIs. The sources of capital.
• Seekers: Corporates raising equity, governments issuing bonds, financial institutions accessing funds.
• The infrastructure in between1:
  • Exchanges (BSE, NSE, MCX): Where buyers and sellers meet and trades take place.
  • Asset managers: Who pool money from investors and deploy it at scale.
  • Depositories & clearing corporations: The back-office that ensures every trade actually settles.
  • Brokers & depository participants: The last-mile interface for retail investors.
  • RTAs, custodians, investment banks: Record-keeping, asset custody, deal structuring.
  • Advisors, analysts & distributors: Professionals helping investors decide where to put their money.

Each entity in this ecosystem earns revenue when markets are active and grows when more money flows through the system.

The Growth of India’s Capital Markets:

Twenty-five years ago, this market ran on paper certificates and settlement that could stretch into weeks. It has since gone through three phases2:

• 1990s Building the foundation (1990s): Electronic trading, dematerialisation, SEBI becoming regulatory authority, and the launch of NSE.
• Deepening the market (2000-15): Products multiplied, retail participation grew, and foreign institutional money came in at scale.
• Digital changes the game (2015 onwards): Aadhaar, e-KYC, UPI, and discount brokers reduced time for account opening from days to minutes and eliminated barriers like cost of entry.

Source: https://www.mstock.com/articles/indian-stock-market-evolution#growing-relevance-of-capital-markets-in-indias-economy

Demat accounts grew steadily until 2020, then grew explosively through 2025 (Source: Axis Capital Research Report, April 2026 (Behind the Trades). Further, equity average daily turnover grew at 23% CAGR since FY16 and derivatives at 67% CAGR3.

The businesses at the centre of that activity like brokerages, exchanges, and depositories saw volumes they had never seen before.

The Savings Story and Why This Is a Decade-Long Opportunity

India's gross domestic savings are approaching US$1 trillion annually. The IMF projects GDP crossing US$6.7 trillion by 2030, at a 30% savings rate, that is, roughly US$2 trillion in annual savings, about 80% higher than 2024 levels4.

For most of India's history, it went into gold and real estate. This pattern is changing for reasons like:

• Ease of access to capital markets: You can invest in the markets in a matter of minutes digitally, which wasn’t possible a decade ago.
• Smaller ticket sizes: Mutual funds introduced the micro-SIPs starting from ₹100.
• Regulatory trust: SEBI's track record has made the system credible to first-time investors.
• Lower costs: Discount brokers brought brokerage to near zero for equity delivery. Further, passive funds and direct mode of investing in mutual funds are cost-effective options.
• Return potential: With deposit rates frequently trailing inflation, equities and mutual funds present opportunities for growth.

Now let’s look at an example: Every rupee moving from traditional savings into capital market instruments like mutual funds generates fee income for asset managers, trail income for a distributor, AUM-based revenue for an RTA, and transaction flow through a depository. Thus, the financialization of household savings directly expands revenue for every business in the capital markets chain.

Mutual fund AUM stood at ₹81.5 trillion as of FY26, growing at 19% CAGR since 2010 (Source: MF Industry AUM Growth - AMFI, Emkay Research Report BFSI – Capital Markets, as of 13 April 2026; SIP Gross Flows – Jefferies Report Dt Feb 5 2026). Further, India's Mutual Fund AUM-to-GDP ratio is roughly 20% against a global average of 64%. Active demat accounts are around 5 crores, while UPI users are 49 crores5.

From the data, this just seems to be the beginning, and the growth potential in this space is massive in the coming decade.

The Index That Tracks The Capital Market Ecosystem

The Nifty Capital Markets Index was built to capture the companies running this infrastructure. It draws from the Nifty 500 universe, selecting stocks from relevant industry categories like exchanges, asset managers, depositories, brokerages, clearing houses, RTAs, and wealth managers.

Top 10 Holdings: Nifty Capital Markets Index (as of 30-Mar-2026)

Source: Nifty Indices. Data as of 30-Mar-2026. Past performance may or may not be sustained in the future. The above information should not be construed as promise, guarantee or forecast of returns. Table / Charts mentioned above are used to explain the concept and is for illustration purpose only. The Stocks mentioned herein are for general assessment purpose only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. https://niftyindices.com/indices/equity/thematic-indices/nifty-capital-markets

Sector breakdown: The index is roughly 40% in exchanges and data platforms, 23% is in asset management, 19% in stock broking, with smaller allocations in depositories and distribution businesses6.

By market cap, the index is predominantly mid and small cap (around 84% combined). The index is free-float market cap weighted, caps any single stock at 20%, and rebalances semi-annually7.

How the Nifty Capital Markets Index Has Performed

Data as of 30-Mar-2026. Past performance may or may not be sustained in the future. The above information should not be construed as promise, guarantee or forecast of returns. Table / Charts mentioned above are used to explain the concept and is for illustration purpose only. *Nifty Capital Market Index start of index values from 28-Mar-2019.

Presenting Axis Nifty Capital Markets Index Fund

Axis Nifty Capital Markets Index Fund is an open-ended passive fund that tracks the Nifty Capital Markets TRI. It gives investors direct exposure to the businesses running India's capital markets infrastructure without having to pick individual stocks or time the market.

Key Features:
- Broad ecosystem exposure: One fund covering stocks representing exchanges, AMCs, depositories, brokers, and wealth managers, essentially the full capital markets value chain.
- Passive, rules-based management: Tracks the index with no active stock-picking and keeping costs low and strategy transparent.
- Experienced passive team: Axis AMC's passive research team has 15+ years of experience with NSE, BSE, and S&P Dow Jones Indices.

Who May Consider This Fund:

• Long-horizon investors: Those with at least a 3 to 5 year view on India's capital markets deepening.
• Investors comfortable with concentration: The index is thematic and sector-specific; it works as a satellite allocation within a diversified portfolio.
• Very High Risk Appetite: Investors with very high risk profile

Conclusion

The question we need to ask ourselves before investing is a direct one: Do we believe more Indians will participate in capital markets over the next decade? Do we think mutual funds, exchanges, and brokerages will process meaningfully more transactions in 2035 than they do today? If yes, the companies in this index grow alongside that activity. Axis Nifty Capital Markets Index Fund gives investors a way to own that outcome!

Sources:
1 https://www.investopedia.com/terms/c/capitalmarkets.asp
2 https://www.nism.ac.in/blog/indias-capital-markets-3-0-opportunities-and-way-forward/
3 https://www.mstock.com/articles/indian-stock-market-evolution#growing-relevance-of-capital-markets-in-indias-economy
4 https://data.worldbank.org/indicator/NY.GDS.TOTL.CD?locations=IN
5 https://www.valueresearchonline.com/learn/stocks/207-million-demat-accounts-india-real-investing-gap/
6 https://www.niftyindices.com/Factsheet/Factsheet_NiftyCapitalMarkets.pdf
7 https://www.niftyindices.com/Factsheet/Factsheet_NiftyCapitalMarkets.pdf

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