Indian Households Make $1 Trillion in Stock Market Gains Over Last Decade

The global investment bank estimates that Indian households added $8.5 trillion to their wealth in the last decade, with equities contributing about 11% of this growth. When accounting for founders, the total wealth increase rises to $9.7 trillion, with equities accounting for approximately 20%, or about $2 trillion.

Despite this impressive growth, Morgan Stanley believes Indian households are still under-invested in equities. "At cost, only 3% of the household balance sheet is in equities, excluding equity holdings of founders. This number could rise to double digits in the coming years," said Ridham Desai, Managing Director at Morgan Stanley, in the report.

Over the past decade, India's stock market capitalization has surged from $1.2 trillion in March 2014 to $5.4 trillion in November 2024, making it the fifth-largest equity market globally. India's share in global market capitalization has also grown from 1.6% in 2013 to 4.3% in 2024, positioning the country as a strong player in the emerging markets.

Desai highlights that while household exposure to equities remains low compared to other asset classes, a structural shift is underway. Drawing parallels to the U.S., where domestic flows into equities surged in the 1980s and 1990s, he predicts that a similar trend could unfold in India, significantly boosting domestic equity ownership in the coming years.

This growing pool of domestic risk capital makes the Indian economy less vulnerable to global forces such as interest rate changes, economic shifts, and capital flows. Morgan Stanley notes that India's domestic-driven market provides greater resilience compared to previous economic crises like the 2008 Global Financial Crisis and the 2013 "taper tantrum."

In addition to equities, gold has been another major wealth creator for Indian households, contributing 22% of the wealth increase over the past decade. However, property remains the largest portion of household wealth, despite its relatively weak performance in comparison to gold and equities.