Between the years 2020 and 2025, the Indian equity markets saw what can be best described as a retail investor boom. The phenomena was partly because of the process of creating a demat account, and digitally investing into stock markets became easily accessible thanks to the emergence of digital first brokerage houses such as Zerodha and Groww (NSE:GROWW) (BSE:544603).

Groww and Zerodha’s web and smartphone applications also appeared around the time two other phenomena were taking place in Indian society, both tied to India’s Digital National Infrastructure (DNI) - biometric - Aadhar identity numbers and the Universal Payments Interface (UPI).

The two DNI tools are partially government funded initiatives and the result of over two decades of policy advocacy by civil society groups, subsidies and political will. These DNI tools made it easy for brokerage houses to onboard retail investors with proper identity checks and compliance measures as well as ensuring their funds could be transferred back and forth between their bank and demat accounts without ever having to leave the house.

The primary driver for these brokerage platforms to catch on was the lack of everyday interaction with traditional economic activity that took place during the COVID-19 lockdown in India. As a result, and perhaps in line with what became a global trend, wherever possible, the financialisation of savings and disposable income played out across the country.

Unlike the US and elsewhere, there were no direct cash transfers or so-called stimulus cheques sent to India's 1.4bn people. The only form of welfare systems in place at the time were increased government subsidies and 'almost' free grain supplies available from designated government ration shops for those who needed it.

Even after the pandemic, the rise in the numbers of these new retail investors continued, as a boom in hiring was also observed in employment trends and the level of disposable income and financialisation of savings had become a habit for some. This was especially true since the promise of retiring early by compounding investments and subsequent returns was seen as a better option for the future than continuing in low-paying, back-breaking employment.

Sensing the momentum, listed companies and companies looking to list in order to raise funds responded by going through with Offer For Sales (OFS) or Initial Public Offerings (IPO) throughout the same period, as demand met supply in the most financially poetic of arenas, the Indian stock markets.

However in 2026, as geopolitical tensions drag equity markets ever downwards, India and its aspirational retail investor class is also feeling the proverbial downturn. The clearest sign of this is the tepid response to many IPOs which were once deemed hot topics of discussion, but ultimately saw a far more muted subscription rate than expected in the year to date.

The latest example of this trend in September 2026 was the response to the National Stock Exchange (NSE) (BSE: 544937)’s own IPO.

While the issue was fully subscribed by the second day of its offering, the majority of the shares were in fact taken by institutional investors and not retailers who demonstrated a complete lack of interest when compared to Groww’s IPO issuance less than a year earlier. Traditionally, a stock market’s own IPO would be eagerly awaited and hugely popular with those members of the general public involved in retail investing, as was the case with the Bombay Stock Exchange (BSE) IPO in 2017.

According to the terms of the offer as filed with India’s regulatory authorities and cited by Fortune India magazine, the minimum retail bid was 8 shares, with the majority of those applying through digital first brokerage houses easily obtaining their desired share count. This ease of allocation was also reflected in the stock’s traded price in the first week it went live, with a downward trend seen across the September 24 to September 29 period.

Although its IPO first opened in 2024, a wave of retail investor frenzy was also expected with the Hyundai Motors India Limited (NSE:HYUNDAI) (BSE:544273) launch, as the stock’s lock-in duration - as defined during the initial offering - expired in April 2026. However, come opening day there was very little enthusiasm seen on the part of many retail investors.

A similarity in the purely OFS nature of the offerings served as a common denominator in both the NSE and Hyundai Motors India cases; the capital in both cases going to those who previously owned stakes in these companies. In the NSE case this was mostly institutional investors and private equity backers, and in Hyundai’s case its South Korean parent Hyundai Motor Company (KRX:005380) in Seoul.

This vastly changed the value perception Indian retail investors had in mind when pledging their savings in subscribing to the offer. 

Coupled to this, the ongoing trend of foreign institutional investors exiting a wide range of Indian equities has also inspired little to no confidence in Indian retail investors who have become acutely aware that as markets worldwide dip, they may be left in a position whereby everyone but those willing to exit will be left holding the proverbial bag.