India’s capital market infrastructure sector, comprising brokers, stock exchanges, depositories and registry and transfer agents (RTAs), generated revenues of over Rs 700 billion in FY25, a report has said. 

The report from global brokerage Jefferies said the growth in revenues was due to rise in market volumes and increasing investor participation. The sector’s outlook will be shaped by faster growth in select segments, diversification into adjacent businesses and resilience to regulatory change, it added.

The brokerage projects mutual fund assets under management to grow at a 16 per cent compound annual rate over FY26–FY28, with mutual fund AUM projected to rise from Rs 67 trillion in FY25 to Rs 103 trillion by FY28.

Cash market average daily turnover (ADTO) is projected to grow 15 per cent and F&O premium ADTO will rise 12 per cent, reflecting moderation in derivatives activity after recent regulatory changes, the report forecasted.

The brokerage expects the number of demat accounts to increase from 192 million in FY25 to 304 million by FY28, and mutual fund folios to climb from 235 million to 377 million.

Brokers accounted for nearly Rs 500 billion of FY25 revenues and exchanges about Rs 200 billion, with depositories and registry and transfer agents contributing to the rest.

Brokers and exchanges are expected to grow faster than other capital market infrastructure segments, it added.

The stock exchanges’ growth will come from rising traction in index options, estimated to grow to around 35 per cent share of options market by FY28.

Brokers’ growth will come from expansion across products including margin trading facilities, commodities, bonds and wealth management, the report noted.

Younger investors are driving incremental participation, with those below 30 years constituting about 40 per cent of the base in FY25.

Analysts noted that the market is likely heading for a year-end rally. The rupee’s sharp reversal and FIIs’ cash market purchases can accelerate this rally, as they lead to short covering, pushing benchmark indices higher.