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Key Takeaway
The volume of investments by retail investors in the market has drastically reduced in 2025. The net flow of investments made by retail investors in the first nine months of 2025 stood at merely ₹12,408 crore. This has decreased by a whopping 87% from ₹1.16 lakh crore in the corresponding period last year.
Inflation, poor performance in the markets over two years, and slow growth of private investments have all led to low confidence among Indians in their economy. The war between the United States and Iran is also putting more pressure on India.
Demat account openings dropped by about 40% during the first nine months of 2025. Demat account registrations for January to September 2025 came down to 21.8 million from 36.1 million in the corresponding months of the previous year.
The Sensex rose just by 0.32%, while the Nifty rose by just 0.5% in the year 2025. Nonetheless, there has been an increase of 14% in the S&P 500 Index, 38% in the DAX, and 34% in the Hang Seng.
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According to Deepak Jasani, who once headed the retail research division at HDFC Securities. “Direct investment is fun, but very few can beat the benchmark or even a mutual fund scheme. Once people realise this, money moves into mutual funds, with little going towards direct investments.”
According to Ambit Capital, the decline in earnings from April to December 2025 is the biggest that was experienced in the last four years. Further, the analysts said that foreigners will be looking for credible earnings performance, not just low valuations.
Gubbi Pramod, co-founder of Marcellus Investment Managers, was quoted as saying. “The Indian equity markets are undergoing a cyclical correction period after having delivered four great years post-Covid.”
Praveen Jagwani, chief executive officer of UTI International, said that “a good correction is required for the sustainable growth of equities.”
Equity investments by retail investors in India are not going away forever. They are opting for investment through mutual funds as well as safe investments until their confidence in the markets improves. Dhiren Shah, who is the co-founder of KamayaKya, said his firm will continue to remain positive about equity investing in India in the year 2026.
What’s going on with Indian stocks since 2024?
Since mid-2024, Indian equities have gone through an extended period of consolidation and correction characterised by substantial foreign outflows and listless returns. High valuation levels and the absence of involvement in the worldwide wave of AI innovation have resulted in foreign money reallocation to other destinations.
What are the psychological reasons Indian investors panic during stock market corrections?
Losses in the Indian stock markets tend to cause panic among investors because people lose twice as much pleasure from a gain as they experience pain from a corresponding loss.
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