ABSTRACT:
The growth of retail investors has resulted in a notable shift in the investor base of the Indian stock market in recent years. India's equity landscape, which has historically been dominated by domestic and foreign institutional investors (FIIs), has changed due to individual participation, the growth of digital trading platforms, rising financial literacy, and a growing preference for equity over conventional savings options. This study examines the main causes of this increase, such as the growth of mutual funds, the role of systematic investment plans (SIPs), regulatory changes, and the adoption of digital technology brought on by the pandemic. Risks like speculative trading, herd mentality, and concentration in high-risk sectors still exist even though retail investors have democratised and deepened the Indian equity market. With the help of secondary data from SEBI, RBI, and NSE and Economic Survey reports, this study employs a trend-based analysis to shed light on how retail investors are influencing the direction of the Indian capital markets. This study looks at the factors that influence retail investor participation in Indian markets, including its size, advantages, difficulties, policy responses, and future direction. It ends with suggestions for ensuring financial stability and long-term inclusion. The results imply that retail participation is a structural change that will impact wealth distribution, policymaking, and market stability in the years to come rather than being a passing trend.