India’s stock market is in a tricky spot, and regular investors are seeing lower returns than what big numbers suggest. A report from Kotak Institutional Equities shows that, even though the Nifty 50 and Sensex indices are looking stable, many retail investors who bought stocks at high prices have lost money.
The report says that relying on headline numbers can be misleading because many investors jumped in when prices were high and added more money during market peaks. Plus, costs like taxes and trading fees have made things worse for regular investors.
Currently, the Nifty 50 has a slight positive return of 6% over the last year, but it has dropped 5% in the last six months and 4% in the last three months. Smaller companies (midcap and smallcap) are struggling even more, with drops of 11% and 13% during the same period.
In 2024, more people started investing, with mutual fund investors increasing from 45 million at the end of 2023 to 53 million by December 2024. However, many new investors, especially those in trendy stocks, have faced difficulties, and several of these popular stocks have dropped sharply.
Both the Nifty 50 and BSE Sensex have fallen about 12.4% and 11.5% from their highest points. Experienced investors might have put in big sums when prices were high, especially in specific funds.
How the Indian stock market performs soon will depend on whether retail investors decide to keep their stocks or sell them if returns remain low. Kotak warns that retail investor behavior in the coming weeks or months will strongly influence the market.
While foreign investors have sold off $28 billion in stocks recently, local institutional investors have picked up much of the selling. Still, it’s unclear how much support retail investors can give to keep stock values stable.
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