India’s capital markets witnessed a year of contrasts in calendar year 2025. While equity indices ended the year in positive territory and primary market fundraising touched record levels, activity in the secondary market cooled meaningfully, reflecting a notable change in how investors chose to participate in markets.

According to the annual highlights released by the National Stock Exchange of India, cash market turnover on the exchange declined 14.5% year-on-year during 2025. This moderation came despite benchmark indices delivering gains over the year, indicating that higher index levels did not translate into proportionately higher trading activity.

The slowdown was even more pronounced in the derivatives segment, which has been a major driver of volumes in recent years. Equity derivatives turnover fell 24.6% over the year, marking a clear pullback in trading intensity across futures and options. The data suggests that the frenetic pace of derivatives activity seen in earlier periods eased significantly, pointing to a more cautious approach by market participants.

Over the past few years, India’s equity markets have seen explosive growth in derivatives trading, driven largely by retail participation, easy access to trading platforms, and heightened short-term speculation. This surge made India one of the largest derivatives markets globally by volume. However, regulators repeatedly flagged concerns around excessive leverage, retail losses, and systemic risk, leading to tighter norms and greater scrutiny.

Against this backdrop, the 2025 data suggests that these concerns, along with elevated market levels, may have started influencing investor behaviour. Rather than exiting markets entirely, participants appear to have recalibrated how and where they deploy capital.

The NSE data shows that participation itself declined alongside volumes. The number of individual investors who traded at least once in the cash segment fell 8% during the year. In equity derivatives, the contraction was much sharper, with retail participation dropping 25.5%. This underscores a broad-based retreat from high-frequency and leveraged trading strategies, even as headline indices remained resilient.

In contrast to the cooling secondary market, capital raising through the primary market remained exceptionally strong. Companies mobilised record amounts through IPOs and other equity issuances in 2025, making it one of the most robust years for fundraising on Indian exchanges. Mutual funds emerged as increasingly important participants in this process, deploying large pools of domestic savings into public issues and acting as anchor investors in several large offerings.