Retail investors who had flocked to the market at the time of COVID outbreak are believed to be the worst hit by the market mayhem. Those who could not book profits and averaged during the period of correction since September 2024 to average the losses seem to be impacted the most.
“One thing that the global equity market does not like is uncertainty. As of today, the level of uncertainty in the world is at its peak,” said Apurva Chaturvedi, co-chairman, IMC Young Leaders Forum.
“When there is no clarity on what the future holds, investors like to cash out and keep the funds ready for deployment when levels of uncertainty reduces. And this is why the markets are in a free fall,” he added.
Retail participation has been a key support system driving positive trends in the stock market over the last five years. From 4 crore demat accounts in 2020 the number has gone up to 14 crore in 2024 with over 10 crore new investors joining the capital market during this period.
According to January 2025 data from AMFI, a fall of 3.6% was witnessed in equity mutual fund inflows, totalling ₹39,687 crore. However, net investments stayed positive for 47 months. The monthly systematic investment plan (SIP) inflows into MFs fell to a three-month low of ₹25,999 crore in February as market sell-off intensified, as per AMFI data, indicating nervousness among retail investors.
“The pain in the market is real, and you can feel it across the board—from seasoned investors to those who joined the rally post-COVID in 2020. Many retail investors are now sitting on losses of 20–30%, facing their first real market crash,” said Trivesh D, COO, Tradejini, a brokerage firm.
“The psychology of loss is kicking in hard, especially for those who had put in their savings expecting steady growth. But this cycle isn’t new buying high in euphoria and selling low in panic has been happening for decades,” he said.
“We’re in a phase where caution matters more than confidence. Investors can consider raising some cash when the market shows brief stability and then deploy it gradually, not all at once. No one can time the bottom perfectly, so it’s better to stay strategic,” Mr. Trivesh said.
“On days like today, with wild swings, the best thing to do is stay calm. Don’t panic sell. Don’t rush to buy either. Let the market settle. There could be pockets of opportunity in financials, infra, cement, maybe even selectively in pharma or real estate if global jitters ease,” he added.
“This feels like a broader capitulation phase. Retail investors may have been shaken out early. Mutual fund SIPs are already seeing redemptions and pause signals. When investors see red on their statements, they tend to hesitate and that’s understandable,” he said, adding that right now it is about protecting capital, keeping emotions in check and waiting for clarity.
Published – April 07, 2025 10:32 pm IST
