Share market today vs. share market 5 years ago: What's changed?

The Indian share market today has witnessed a stunning transformation in the last five years, changing from a recovery phase in 2020, to a rich and healthy financial environment in 2025. Driven by economic liberalisation, digital growth, and the rise of retail participation, the Indian share market today ranks as the fourth largest stock market in the world - beating Japan and the United Kingdom, in terms of market capitalisation.

This article aims to evaluate the evolution of the Indian share market, highlighting the important shifts witnessed in the past five years

1. Exponential Growth in the Market

The Indian stock market has undergone a dramatic transformation since the COVID-19 outbreak in 2020. Market capitalisation has grown from $2.1 trillion to over $5 trillion by May 2025, demonstrating a strong shift toward economic optimism and investor participation.

The SENSEX, which traded at 33,354 in April 2020, now stands at 82,176.45, a staggering 149% increase.

This surge has been driven by structural strengths¡ªhigh domestic demand, a rapidly expanding middle class, and surging foreign investments. The $42.13 billion FDI inflow in the first nine months of 2025, a 42% jump from the previous year, has played a critical role.

Unlike 2020¡¯s volatility and uncertainty, today¡¯s market operates with greater macroeconomic stability and deeper retail participation, aided by simplified processes to open demat accounts.

2. Rise in Retail Investor Involvement

Retail investor participation in India has seen an extraordinary surge since 2020. In March 2020, retail stock holdings stood at approximately ?8 lakh crore, with about 4 crore investor accounts. Whereas in 2025, the National Stock Exchange (NSE) reported over 22 crore investor accounts, with 2 crore new accounts added in just six months since October 2024.

Retail ownership has soared to ?63 lakh crore, driven by growing financial literacy platforms, the freely accessible user-friendly trading platforms, and improved digital access. In sharp contrast, 2020 was marked by limited retail involvement, largely due to economic uncertainty and an underdeveloped digital ecosystem.

The exponential increase in demat accounts and mutual fund investments highlights a growing trend ¡ªone where India¡¯s youth are increasingly focused on long-term wealth creation and financial independence.

3. Advances in Trading Technology

In 2020, the Indian share market was not much used to the now-popular digital assets and applications, with online platforms in their early stages of evolution. By 2025, however, digital advancements have dramatically reshaped the trading landscape. Online trading platforms¡ªequipped with real-time updates and AI-driven analytics¡ªhave made market access more democratic and data-driven.

Both NSE and BSE have fully integrated electronic trading systems, boosting transparency, speed, and operational efficiency. Mobile applications now dominate retail trading, with 70% of retail investors using smartphones to trade in 2025¡ªup significantly from 30% in 2020.

These innovations have significantly reduced transaction costs and bridged the accessibility gap for rural investors. As a result, more individuals are opening demat accounts and actively participating in the market, marking a major leap toward inclusive financial growth.

4. Sectoral Diversification and Shifts

Five years ago, the Indian stock market was largely led by technology, healthcare, and FMCG sectors¡ªkey drivers of the post-pandemic recovery. However, by 2025, sectoral rotation has significantly diversified market dynamics.

Government initiatives like the Make in India program have propelled the growth of infrastructure, banking, and manufacturing sectors. With a national goal of raising manufacturing¡¯s share in GDP to 25% by 2025, investor interest has steadily shifted toward companies aligned with this vision.

Stocks such as Bharat Electronics and Rail Vikas Nigam are gaining traction, reflecting increased government spending and investor confidence in India¡¯s long-term industrial development.

Back in 2020, FII inflows were quite volatile, with net investments of around ?1.01 lakh crore, mainly due to uncertainties caused by the pandemic. Fast forward to May 2025, and FIIs pumped in ?23,778 crore in just one month¡ªclearly showing renewed faith in India¡¯s growth story.

India¡¯s weighting in the MSCI Emerging Markets Index has soared to a record 20.5%, proving its increasing importance on the global stage. The difference is stark compared to 2020, when FIIs hesitated amid the pandemic. Today, with a stable economy and a solid 6.8% GDP growth forecast, India has become a hotspot for foreign investors.

6. Growth of IPOs and Market Liquidity

In 2020, the Indian IPO market struggled through the economic slowdown, managing only 55 IPOs worth ?26,611 crore. By 2025, however, the scene has transformed dramatically. In May alone, five new IPOs launched in a single week, attracting a fresh wave of investors eager to open demat accounts and participate in the market.

The landmark LIC IPO of 2022 paved the way, and the strong retail and institutional interest continues unabated. With ?1.2 trillion raised through public and rights issues in FY 2023, this enhanced liquidity has been a key factor in sustaining market resilience, counteracting the liquidity squeeze of earlier years.

7. Regulatory Reforms and Market Stability

In 2020, SEBI faced significant challenges in managing market volatility, with circuit breakers triggered multiple times during the pandemic. By 2025, SEBI has implemented robust reforms to enhance market stability. Key measures include streamlined disclosure requirements for corporate bond cash flows and tighter regulations on index option trading to curb excessive speculation.

These initiatives have effectively reduced risks of market manipulation and improved corporate governance¡ªissues that were major concerns five years ago. Additionally, the introduction of random mid-trading snapshots in 2025 has further increased market transparency.

8. Volatility Trends and Sentiment of Investors

The Indian market in 2020 experienced extreme volatility, with the Nifty having faced 15 crashes between 2000 and 2008, and sharp corrections triggered by the pandemic in 2020. While volatility persists in 2025¡ªevident from a 7-10% correction in the Sensex compared to small-cap and mid-cap indices¡ªthe market today demonstrates greater resilience.

On May 19, 2025, the Nifty 50 closed at 25,030.50, with a slight gain of 0.04%, reflecting cautious optimism among investors. Current sentiment is bolstered by strong domestic inflows and attractive valuations, in stark contrast to the fear-driven atmosphere of 2020. The Sensex and Nifty¡¯s five-year average annualized returns of 10-12% underscore this enhanced market stability.

Conclusion

The Indian share market in 2025 stands in stark contrast to its 2020 counterpart. Marked by a surge in market capitalization, rising retail participation, technological advancements, and broad sectoral expansion, the market has evolved into a formidable global player. Strengthened by increased FII inflows, a robust IPO pipeline, decisive regulatory reforms, and improved resilience to volatility, its foundation has never been stronger.

As India advances toward becoming the world¡¯s third-largest economy by 2027, the stock market continues to play a pivotal role in driving economic growth and wealth generation. Navigating this transformative phase requires investors to stay informed, adaptable, and strategically positioned to tap into emerging opportunities.