The recent stock market crash has sent shockwaves through the portfolios of many investors in India.
Rajesh Kumar, a Bihar-based engineer, is one of the millions who joined the investing boom in recent years, shifting his savings from bank deposits to mutual funds, stocks, and bonds. However, the tide has turned, with India’s markets sliding for the past six months as foreign investors pulled out and valuations remained high.
The decline has wiped out $900 billion in investor value since the September peak.
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India’s benchmark Nifty 50 share index has been declining for five straight months, its longest losing streak in 29 years. This slump has impacted an economy once one of the world’s fastest-growing markets.
“For more than six months now, my investments have been in the red,” Mr. Kumar says. He worries about selling investments at a loss to cover his son’s private medical college fee due in July.
His anxieties reflect millions of middle-class Indians who have poured into the stock market, part of a financial revolution marked by the rise of Systematic Investment Plans (SIPs). The number of Indians investing through SIPs has soared past 100 million, nearly trebling from 34 million five years ago. Many first-time investors, lured by high returns, enter with limited risk awareness, often influenced by social media platforms.
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Tarun Sircar, a retired marketing manager, moved his retirement fund to the stock market last year before the crash. “I’ve put 80% of my savings into mutual funds, keeping just 20% in the bank,” he says. Some have opted for riskier investments.
Ramesh, an accounting clerk, borrowed money to invest in stocks during the pandemic, which was influenced by YouTube influencers.
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Middle-class investors face market woes
After losing over $1,800, he shut his brokerage account and swore off the market.
Financial adviser Samir Doshi says, “This crash is unlike the one during the Covid pandemic. Back then, we had a clear path to recovery with vaccines on the horizon. But now, uncertainty looms—we simply don’t know what’s next.”
The increased accessibility of investing through digital platforms has drawn a broader, younger audience seeking alternatives to traditional assets.
However, many new Indian investors need a reality check. “The stock market isn’t a gambling den—you must manage expectations,” says Monika Halan, author and financial educator. This market crash couldn’t have hit India’s middle class at a worse time.
Economic growth is slowing, wages are stagnant, and job creation isn’t keeping pace. Financial advisers believe some people will move their money to safer bank deposits if the volatility continues. However, most believe that the market is correcting itself from previous highs.
Foreign investor selling has eased since February, suggesting the market downturn may be nearing its end. Following the correction, valuations for many stock market indices have dipped below their 10-year average. Veteran market expert Ajay Bagga expects GDP and corporate earnings to improve, aided by economic stimulus and falling interest rates.
However, geopolitical risks will keep investors cautious. “This correction is a much-needed wake-up call for those who enjoyed 25% returns—that’s not normal,” says Ms. Halan. “If you don’t understand markets, stick to bank deposits and gold. At least you have control.”
