High market capitalization is emblematic of the Indian robust economic development. A State Bank of India report states that fund mobilization in Indian companies has grown ten-fold in the last 10 years. Increased investor confidence reflects the strength of India’s economy.  The report cites that fund mobilization through capital markets has increased from Rs 12,068 crore in 2014 to Rs. 1.21 lakh crore in FY25. It also shows that a 1 per cent rise in the stock market’s capitalization results in a 0.06 per cent contribution to the country’s GDP.

"A higher market capitalization signals a robust economy and higher investor confidence consequently driving overall economic growth," reads the report.

Furthermore, an analysis of impulse responses indicates that a shock of one standard deviation in market capitalization positively affects the real economy; however, this effect decreases after three-time intervals.

The report shows a significant increase in household participation in the stock market. It marked an increase in savings in shares and debentures from 0.2 percent of GDP in FY14 to 1 percent of GDP in FY24.  

Indian households are also showing increased confidence in capital market investments. It accounts for 5 per cent of the overall household financial savings. This indicates a growth of 4 per cent from FY 14. During that period NSE market capitalization has expanded over six times amounting to Rs 441 lakh crore in FY25. Consequently, the average trade size in the equity cash segment has grown from Rs 19,460 in FY14 to Rs 30,742 in FY25.

The report further underlines the growth of Indian capital markets and its significant role in Indian economic development, with increased contribution from households and enhanced investor confidence.